Connect with us

Markets

Bitcoin’s Top Rival Is Up 90% and Ready to Ditch Mining

Published

on

Ethereum- Investorsking
  • Bitcoin’s Top Rival Is Up 90% and Ready to Ditch Mining

Marco Streng’s computer servers are what make Ethereum tick.

Thousands strong, they whir day and night, solving the complex math riddles that are essential to verifying transactions on the hottest new platform in the world of cryptocurrencies and blockchains. Without these machines, or those deployed by Streng’s biggest rivals, there would be no Ethereum.

But mining, as the practice is called, is costly and inefficient and, frankly, a bit weird. And Ethereum’s developers have always envisioned a time in which the cumbersome process of brute-force computing would be replaced by a system that relies simply on collateral. That time, some four years after the network was first proposed, is now. The developers want to put this “proof-of-stake” model, called Casper, into place by year-end.

The stakes are high. If Ethereum is going to take advantage of the potential that companies like JPMorgan, Microsoft and IBM see in its underlying transaction technology, the blockchain, as the potential backbone that could reshape modern business and finance, it needs to gain wide adoption to become something of a de facto standard.

Without mining, Ethereum “will be more usable, more secure and more scalable too,” said Vlad Zamfir, who’s been working on Casper since 2014.

Secure Transactions

The main draw of the blockchain is that it’s a cryptographically secured list of transactions that can be shared, which backers say could dramatically improve how financial services, supply-chain and health-care industries are run. (Think immediate settlement of bank transfers and securities trades, as well as near-real-time tracking of food products or research samples.) Ethereum also allows for the use of “smart contracts,” or pieces of computer code that make the terms of such agreements operate automatically.

Miners have been critical to the growth of Ethereum. The market for ether, the digital currency used to pay miners who support the network, has soared 90 percent this year alone. It’s the second-most popular cryptocurrency behind bitcoin, which has gained 24 percent in the same span, setting records almost every day as investors look to hedge against potential global uncertainty and hope for a bitcoin-based exchange-traded fund to get regulatory approval.

Even before Ethereum was first released in 2015, developers had envisioned moving away from the mining-based model, known among tech geeks as “proof-of-work.”

Tougher Computations

As the network gets more popular, the computations the miners need to complete to validate transactions get harder and harder. Not only has this created the potential for bottlenecks (which already plague bitcoin), it’s also set off an environmentally taxing arms race among the biggest miners, which run server farms consuming vast amounts of electricity.

And to many techno-utopian enthusiasts, using all that computing power to continually solve what amounts to pointless problems is a big waste.

That’s where Casper comes in.

Rather than rewarding miners with the most computing power, the “proof-of-stake” model requires that users put up collateral if they want to collect fees for validating transactions. The more collateral you put up, the more money you can get paid for verifying transactions.

It would take power away from miners like Streng, who have to approve software changes, and make it easier to implement improvements on the fly. A handful of bitcoin miners in China have already hamstrung some attempts to increase that cryptocurrency’s capacity. (Miners can’t vote against the switch.)

The move will make Ethereum “more attractive in large-scale applications,” said William Mougayar, author of “The Business Blockchain.”

Hyperledger, a blockchain venture with more than than 100 members including IBM, JPMorgan and American Express, could adopt Ethereum’s “proof-of-stake” model if it’s successful, according to Brian Behlendorf, the consortium’s executive director. It could also help put the network in “a league of our own,” Andrew Keys, head of global business development at startup ConsenSys, the world’s largest Ethereum-centric blockchain software engineering company.

No Sure Thing

Making “proof-of-stake” work is hardly a foregone conclusion.

Casper’s rollout has been delayed before. And the use of deposits potentially increases the risk of hacking. (While Zamfir said he’s working to make sure hackers can’t steal deposits, he couldn’t rule out the possibility, however remote, that an attack could, in effect, delete the money.)

Streng, who stands to lose out if Casper is implemented, is wary.

“There’s a lot of incentive for people to game the system,” he said.

Trust in Ethereum was badly shaken last summer, when a hacker stole millions from a project called the DAO. Developers had to rush to implement a software change, which ended up splitting the Ethereum community in two. Now, each operates its own, separate blockchain.

Zamfir says the benefits outweigh the risks. One of the biggest is “transaction finality.” Unlike most blockchain technologies, which require multiple verifications, settlement on Casper can occur much faster. With some enhancements, the feature could ultimately enable Ethereum to process more payments faster — a key selling point for financial companies.

‘Early Stages’

Mona El Isa, a former Goldman Sachs trader who runs Melonport AG, which builds software for fund managers who invest in digital assets on Ethereum, is confident that developers can work out any kinks with Casper.

“In these early stages of this new technology, you can’t expect everything to go right,” El Isa said.

If Casper ultimately happens, Streng says it won’t be the end of the world. He can redeploy his servers to mine other cryptocurrencies or become a depositor on Ethereum instead. But he isn’t holding his breath just yet. Implementing such a sweeping change isn’t going to be easy and it’s still possible the plan could be scrapped altogether, he says.

“The developers have very bright minds,” he said. Nevertheless, “they wouldn’t risk the Ethereum network, in my opinion.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Continue Reading
Comments

Crude Oil

Oil Prices Drop 3 Percent on Tuesday After Moderna’s CEO Comment

Published

on

Oil prices - Investors King

Oil prices tumbled more than 3% on Tuesday after Moderna’s CEO cast doubt on the efficacy of COVID-19 vaccines against the Omicron coronavirus variant, spooking financial markets and adding to worries about oil demand.

The head of drugmaker Moderna told the Financial Times that COVID-19 vaccines are unlikely to be as effective against the Omicron variant of the coronavirus as they have been against the Delta variant.

Brent crude futures fell $2.32, or 3.2%, to $71.12 a barrel at 0912 GMT after slipping to an intraday low of $70.52, the lowest since Sept. 1.

U.S. West Texas Intermediate (WTI) crude futures fell $2.15, or 3.1%, to $67.80 a barrel, off a session low of $67.06, the weakest since Aug. 26.

Fed Chairman Jerome Powell will also tell U.S. lawmakers later in the day the variant could imperil economic recovery, prepared remarks show.

“The economic impact is driven by fear, and by the policy response… Fear is impacting travel. There are outright bans. But also the fear of being stranded which causes travel plans to alter,” Paul Donovan from UBS said in a note.

Oil plunged around 12% on Friday along with other markets on fears the heavily mutated Omicron would spark fresh lockdowns and dent global oil demand. It is still unclear how severe the new variant is.

With a weakening demand outlook , expectations are growing that the Organization of the Petroleum Exporting countries, Russia and their allies, together called OPEC+, will put on hold plans to add 400,000 barrels per day (bpd) to supply in January.

“We think the group will lean towards pausing output hikes in light of the Omicron variant and the oil stockpile release by major oil consumers,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.

Pressure was already growing within OPEC+, due to meet on Dec. 2, to reconsider its supply plan after last week’s release of emergency crude reserves by the United States and other major oil-consuming nations to address soaring prices.

“Following the global strategic reserve releases and the announcement of dozens of countries restricting travel… OPEC and its allies can easily justify an output halt or even a slight cut,” OANDA analyst Edward Moya said in a note.

Still, Citi analysts expect OPEC+ to continue to add more barrels in January.

Continue Reading

Markets

Omicron Worries Subside, Solid US Data, Oil Rebounds, Gold Softer, Bitcoin Rises

Published

on

Gold and Bitcoin - Investors King

By Edward Moya

Financial markets have been on a rollercoaster ride since the middle of last week.  We wanted to believe we were getting close to the end of COVID, but the latest jitters from Omicron variant signaled the inevitable COVID winter surge might already be here. Omicron is the latest COVID test for the economic outlook and we won’t have a clear picture until a couple more weeks. Friday’s turmoil looked a lot worse given the lack of liquidity, options volatility and overall frothy levels for equities.

US stocks are rebounding as optimism grows that the Omicron variant is a cause for concern, but not a ’cause for panic’ and could potentially be the catalyst needed to get more of the country vaccinated. Investors will learn over the next couple of weeks if the Omicron variant causes more severe disease than the other variants. So far the MRNA vaccines have proved effective against other variants such as delta and optimism is that even they will eventually need to get tweaked that could be done in a few months time.

Risk appetite got a boost from both the Pfizer CEO and President Biden calmed markets nerves that we won’t go back to the darkest days of the pandemic.  The Pfizer CEO Bourla said he thinks the data will ultimately show the current vaccine will protect less against Omicron but will likely still offer some protection.  President Biden said the US won’t need shutdowns to curb the Omicron variant.

US Data

Pending home sales unexpectedly surged in October as rents skyrocketed and buyers were highly motivated as borrowing costs seem poised to increase steadily as the Fed positions itself to raise rates. US pending homes sales increased by 7.5% from a month earlier, which was a 10-month high.

The Dallas Fed Manufacturing Survey came in slightly below expectations, but still showed manufacturing activity is healthy and the outlook has dramatically improved. The index for general activity came in at 11.8, a miss of the 17.0 consensus estimate and drop from the 14.6 reading in October.  The six-month outlook almost doubled to 28.6, while the raw materials price index hit a series high.

Oil

Oil prices rebounded for two key reasons: the Omicron variant seemed like it would most likely be short-term disruptive to the crude demand outlook and on growing expectations that OPEC+ will refrain from increasing production by 400,000 bpd.

The Chairman of the South African Ministerial Advisory Committee on Vaccines noted that the cases so far had all been mild, mild -to- moderate which was a good sign. As long as South Africa does not see a massive uptick in hospitalizations, optimism will grow that this new variant won’t lead to a wrath closing of borders.  Highly vaccinated countries will continue to thrive and political pressure will grow to get those countries with low vaccination rates more supplies.

OPEC+ pushed their meetings to better assess the impact of the Omicron variant, which will most likely be followed by a delay in delivering an extra 400,000 barrels a day in January. Following the global strategic reserve releases and the announcement of dozens of countries restricting travel to and from South Africa and neighboring nations, OPEC and its allies can easily justify an output halt or even a slight cut in production.

Crude prices gave back some its gains after US State Department advisor reminded traders the US could release more oil.

Gold

Gold prices remained heavy as Omicron panic eased, the dollar rally returned, and after another round of strong US economic data. Wall Street is quickly shaking off last week’s de-risking theme that triggered safe-haven demand for bullion. President Biden said economic lockdowns in response to the Omicron variant are off the table, which means gold could be in trouble if this latest variant mostly yields longer supply chain issues that might fuel the ‘inflation is persistent’ argument. If supply chain issues deteriorate even further, that could lead to faster tapering and quicker rate hikes by the Fed.

Cryptos

Cryptocurrencies are rebounding after last week’s widespread panic-selling from the Omicron variant blew past many stops. The crypto selloff was an overreaction and buyers are quickly reemerging as traders reassess the impact of a new coronavirus variant. Bitcoin is a part of today’s broad risk rally that stemmed from easing COVID fears but will likely struggle to completely get its groove back until vaccine efficacy results in the coming weeks confirm highly vaccinated countries are going back to lockdown mode.

Bitcoin rose 3.5% to $58,284, which makes the year-to-date gain at 101%. Ethereum is back above $4400 and is almost 500% higher this year. The top two cryptos seem like they may consolidate here, but if the Fed accelerates their taper plans and prospects of rate hikes grow, a return to record highs seen earlier in November will be hard to do.

Continue Reading

Markets

V For Volatility

Published

on

Nigerian Exchange Limited - Investors King

By Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA

The buy-the-dip mafia was out in force yesterday, with a fair bit Friday’s Wall Street and European equity sell-off unwound, as well as Friday moves in bond, currencies and commodities and energy. Notably, it hasn’t been a complete reversal by any means, as the world settles into a choppy holding pattern, for clarity about just worried, or not, we should be about the new Covid-19 omicron variant.

President Biden attempted to sooth nerves overnight, but what really drove the retracement were anecdotal reports from the South African medical establishment suggesting that symptoms were milder than delta. Always ready to selectively edit the facts to fit the prevailing market sentiment, cases popping up in multiple locations around the world (they were probably there already), kneejerk travel bans on travellers from Southern Africa (there is no evidence it originated there, they just reported it first), and in the case of Japan, all foreigners, and WHO warnings that the new variant posed a “very high” risk, were mostly ignored by investors worldwide. The fact that markets haven’t completely unwound the Friday meltdowns at least suggests a modicum of caution remains.

To be fair, having been scared by delta, much of Asia is still in ultra-cautious mode, as their recovery was only just gathering steam with borders being tentatively reopened. And one can’t blame national governments for shooting first and asking questions later, after paying the price so badly for their delta complacency earlier this year. Whether that escalates into wider restrictions than a ban on travellers from Southern Africa also remains to be seen.

It will likely be a couple of weeks before the great and good of the global scientific community can make a definitive judgement on how serious the omicron variant is. That means December is likely to be choppy and driven by omicron headlines, and the heavyweight data calendar this week, will be rendered irrelevant. All that will matter is whether more restrictions are coming back around the world, and whether central banks, especially the Fed, hit the pause button on monetary tightening plans. I already know the answer to that one. The big winner this month will be volatility, we should see plenty of it. But with markets selling everything on negative omicron headlines and clasping at the most tenuous of straws to buy everything back on any perceived positive headlines, investors looking for thematic direction moves this month, are likely to be sorely disappointed.

Markets got nothing out of the stream of Fed speakers overnight, who seemed to be going out of their way to avoid thoughts on omicron-world monetary policy. We have had some heavyweight data from Asia today though, although as I have just mentioned, it has been largely ignored. South Korean and Japanese Industrial Production was released, with the YoY data outperforming, while the MoM prints disappointed. South Korea falling -3.0%, while Japan rose on 1.10%. Electronics continued to perform well, but automotive and transport suffered due to the semiconductor bugbear. A cynic might say that the recoveries in both countries are stalling, much like the recent data from China suggests.

Speaking of China, official Manufacturing and Non-Manufacturing PMIs were released for November this morning. Manufacturing PMI managed to recover marginally into expansionary territory, creeping up to 50.1. that follows a sharp rise in Industrial Profits over the weekend, with metals refining and energy, unsurprisingly, leading the way. The data suggests China isn’t out of the woods yet though, although you wouldn’t bet against them. Non-Manufacturing PMI held steady at 52.3, with Covid-19 restrictions potentially offset by Singles Day. The general PMI rose sharply from 50.8 to 52.2, and overall, the data suggests an improvement driven by an easing of China’s power crunch and a slight easing in lending criteria to the property sector. The data is steady, rather than spectacular, and I won’t e breaking out the champagne yet.

We have a raft of GDPs across the Eurozone, as well as Eurozone November Flash Inflation, and German Unemployment this after. In the US, we have the Case-Shiller Home Price data, ad well as CB Consumer Confidence and both Janet Yellen and Jerome Powell are testifying on The Hill I believe. Sadly, unless Mr Powell says the taper will stop if omicron is serious, all of this be ignored. V is for volatility, and there is only one story in town this week, and it is invisible to the human eye.

Wall Street rebound lifts Asian equities.

Asian equity markets mostly ignored the sharp rally in US index futures yesterday morning, but with the rally consolidating in OTC markets in the US and Europe overnight, Asia feels confident about dipping its toes in the water today, although the gains are not universal. On Wall Street, investors unwound much of Friday’s sell-off drama, and despite the tenuous reasoning behind the move, always respect momentum.

The S&P 500 rose 1.32%, the Nasdaq leapt 1.88% higher, while the Dow Jones turned in a respectable 0.65% gain. In Asia, the FOMO mafia have continued pushing index futures higher with Dow futures lifting by 0.25%, and S&P 500 and Nasdaq futures booking 0.10% gains.

After a stunning downside reversal late in the Tokyo session as the government banned entry to all foreigners, the Nikkei 225 is doing what it does best today, following the Nasdaq. Softer Industrial Production data has tempered the gains, but the Nikkei 225 is still 0.60% higher. However, South Korea’s Kospi is 1.05% lower after the government shelved plans to relax Covid-19 restrictions, highlighting once again, what is really driving markets right now. Meanwhile, Mainland China markets have edged higher, the Shanghai Composite and CSI 00 rising by just 0.15%. The casino sell-off persists in Hong Kong today, the latest sector in the Chinese government spotlight, leading the Hang Seng to shed 1.20%.

Across the region, Singapore is unchanged, unable to shake of PM Lee’s comments that Covid-19 freedoms could be rolled back if necessary. Kuala Lumpur though, has risen by 0.55% with Jakarta rising by 0.40% and Bangkok climbing 1.05% as investors build a tourism premium back in once again. Manila has fallen 1.0% while Taipei has rallied by 0.80%. Australian markets, never short of herd-like optimism, or a proclivity to slavishly follow Wall Street, have rallied strongly. The All Ordinaries is 1.10% higher, while the ASX 200 has risen by 0.80%.

European markets reclaimed some losses overnight, and the price action in Asia will likely inspire more buying initially. The same is likely on Wall Street as the pull of the FOMO remains irresistible. I would caution, however, that we are just one negative omicron headline from the whole rally everywhere, evaporating into thin air.

Currency markets remain much more cautious.

Currency markets were volatile overnight but notably, the recovery rally in the US Dollar ran out of steam. US yields rose only slightly after Friday’s sharp falls. The dollar index rose nearly 50 points to test 96.50 intraday but retreated to finish just 0.13% higher at 96.19. In Asia, the last of those gains have been unwound, the index falling 0.08% to 96.11. The index looks like to trade in a choppy 95.75 to 96.50 range over the next few sessions.

Notably, Euro, Sterling and Yen all fell slightly overnight while the Swiss Franc still managed to record gains, as did the Chinese Yuan and Canadian Dollar. EUR/USD is back to 1.1300, with GBP/USD at 1.3325, while USD/JPY is holding steady at 113.65. USD/JPY will find a recovery back above 114.00 challenging this week. AUD/USD and NZD/USD booked modest gains to 0.7145 and 0.6825 overnight, suggesting caution prevails in the G-10 space regarding omicron, and both antipodeans are only just holding above their 2021 lows still at 0.7100 and 0.6800.

USD/MXN and USD/ZAR fell sharply overnight, and that sees the US Dollar is moving lower across the board versus Asian currencies today, helped along by a fall by USD/CNY to 6.3715. USD/KRW, USD/MYR, USD/INR have fallen by 0.25% while USD/SGD and USD/THB are holding steady.

In the G-10 space, currencies appear to be reflecting some well-deserved caution towards omicron still, as usual, refusing to indulge in the mindless FOMO price action in the equity space. However, in the Asian regional space, local currencies appear to be pricing in the likelihood of a slower Fed taper, or even a halt to it thanks to the new variant. It is hard to argue with either thesis at the moment.

That suggests that a lower than expected Non-Farm Payrolls number on Friday is likely to see strength in the emerging space, rather than the DM space versus the US Dollar. And omicron will likely mute any strong dollar effects from a higher than 500k print on Friday. Like other asset classes, markets will be on tenterhooks for the latest omicron headlines across the news ticker.

Oil’s recovery hits an OPEC+ wall.

Oil managed to claw back some losses overnight, but the price action was far from impressive. Brent crude left higher initially, climbing over 5.0% intra-day, but gave back almost all those gains to finish just 0.74% higher at $73.40 a barrel overnight. WTI fared slightly better, closing 2.75% higher at $70.05 a barrel, and reclaiming its 200-day moving average. (DMA) In Asia, both contracts have added another 0.80% to $73.95 and $70.55.

Brent crude appears to have a higher beta to the OPEC+ meeting, logical given it is an international pricing benchmark, whereas WTI is very much US-centric. Overnight, Russia said that other members had not contacted it regarding halting production increases at the full OPEC+ meeting later this week, and that seems to have capped Brent’s recovery. Things move quickly in OPEC+ circles though and I remain of the opinion that the odds of a temporary halt to production increases is well above 50% now, especially with OPEC+ compliance already above 100%, suggesting limited swing capacity anyway.

That said, Friday’s lows still feel like the bargain of the year if you were an oil buyer, speculative or physical. Rather than second-guessing OPEC+, I am content to watch from the side-lines from here, as oil markets will be more vulnerable than most omicron headlines and violent swings in sentiment. Heightened volatile means that long or short, you P and L can still be nought.

The respective 200-DMAs at $72.70 and $70.00 a barrel should provide some support, if for no reason that a fall to those points will send the relative strength indexes (RSIs) into oversold territory. Above, some resistance should be found at $77.00, and $74.00 a barrel respectively.

Gold looks unimpressive.

Gold’s price action continues to underwhelm, as it finished the overnight session down 0.46% at $1785.00 an ounce, before eking out a 0.20% gain to $1788.50 an ounce in Asia. There are zero signs of any safe-haven bids emerging to shelter from virus volatility, and it is falling despite both US yields and the US Dollar also falling. Gold has now closed below its 50,100 and 200 DMAs clustered between $1791.00 and $1792.50 an ounce.

Gold will have resistance at $1800.00 and $1815.00 to start the week, while yesterday’s spike to $1770.00 an ounce, will provide initial support. In between, gold may find some friends around $1780.00. Failure of $1770.00 signals a retest of $1760.00 and $1740.00 an ounce. Friends are what gold needs to find quickly though, and I do not rule out a move lower to $1720.00 this week, especially if the Non-Farms puts the Fed taper back in the spotlight and we have a lull in virus headlines.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending