Market report

WHAT MAKES BITCOIN VALUABLE?

London Block Exchange

22nd January 2017

Numerous factors — but today let’s focus on mining!

WHAT MAKES BITCOIN VALUABLE?

Numerous factors — but today let’s focus on mining!

With the majority of cryptoassets continuing to trade sideways over the past few days, it’s a good time to delve back into the fundamentals and gain a better understanding of how this sphere is valued. This is especially important when you look at the stock price of NVIDIA, the chipmaker, which may also be in a ‘major bubble’.

NVIDIA is one of the major players in the computer industry that has been benefitting from the cryptoasset revolution. They produce the chips used to create mining rigs that power many different projects’ blockchains; but what is mining?

We explained it in depth in this December newsletter. In short, it’s the process of ‘creating’ a block of verified transactions. Miners ‘mine’ to receive a reward for building the blockchain, which is is only handed out if the majority agrees the block is valid.

Mining is what makes Bitcoin and other cryptoassets valuable, because this incentive system is very difficult to attack. That is one of the factors driving NVIDIA’s stock price and making people trust blockchain technology more and more!

To put this in perspective — as we shared last Friday — “as of November, the cost of building a supercomputer powerful enough to corrupt the bitcoin ledger would be around $3.14 billion in hardware and $5.6 million in electricity every day”!

DID BITCOIN BREAK OUT THIS WEEKEND?

Kind of — but it’s more important to understand why!

We mentioned that most projects were trading sideways, but there was also a ‘fake’ bitcoin breakout this weekend, which is interesting to analyse. This ‘breakout’ was possibly fuelled by the issuance of more tether, just like the prediction we shared on Friday posited.

The tether controversy is continuing to unnerve participants in the space, mostly because the USD tokens might have been used to artificially inflate bitcoin’s price. Here’s a good overview of the situation if you want to be prepared!

Meanwhile, it’s interesting to note that over the past 24 hours, the top 100 cryptoassets’ prices lost on average 7% and only seven projects managed to stay in the green. EOS, the largest ICO in history, was the only member of the top 10 that made the green list!

WHAT TO LOOK OUT FOR

Filter the noise and stay ahead of the pack

Today, there is a meet-up and drinks session at London’s Grange Tower Bridge Hotel. It starts at 16:30 GMT and is part of London’s Blockchain Week!

Later on, the users of KuCoin, an exchange, finish voting on which token should be added next. Check the winner at 16:00 GMT!

Later in the week you can watch an “Oxford-style” debate on whether ‘Bitcoin is dead’ or not — so long as you are in Davos for the World Economic Forum!

WHAT TO READ TODAY

An insight a day could give you more profits to play

Do you still fall for “low-priced” cryptoassets with a token supply in the billions, or even trillions? Read this and don’t succumb again!

Do you still trust everyone you meet online? No one is safe from social engineering, not even in ‘safe’ communities! Read this and learn from other’s mistakes!

Do you still struggle to value cryptoassets? You might have heard of Chris Burniske’s methodology. Read this extension by Alex Evans and review your knowledge!

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  • NVIDIA
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