Last Weeks Top News Stories and Price Action
- China’s ringing endorsement heralds global blockchain race
- Google claims quantum supremacy. Is it a threat to Bitcoin?
- Bakkt Bitcoin consumer app coming to a Starbucks near you
- France integrates cryptocurrency into the high-school curriculum
President Xi urges China to seize blockchain opportunity
In a week of major developments, Chinese President Xi Jinping’s rallying call to the nation, emphasizing the importance of seizing blockchain’s innovation potential across various sectors proved by far the most resounding and is being widely regarded as the beginning of a global race to be at the forefront of blockchain adoption.
At the 18th collective study on the status quo and trend of blockchain technology development conducted by The Central Politburo of the Communist Party of China, Xi Jinping lauded blockchain as an “important breakthrough for independent innovation of core technologies” and noted its potential in, inter alia, “solving the risks of banks.”
“Blockchain will play an important role in the next round of technological innovation and industrial transformation. We must take the blockchain as an important breakthrough for independent innovation of core technologies. We must clarify the main direction, increase investment and accelerate the development of blockchain technology and industrial innovation.”
Following the comments, searches for the term “blockchain” on Chinese search engine Baidu spiked by 4500% last weekend. Bitcoin surged over 40% within hours. Shares of Xunlei, blockchain-based Chinese file-sharing platform, rose 107% and various other blockchain-related Chinese tech stocks also posted significant gains.
The speech marked a volte-face in the country’s long-standing disposition towards blockchain. It was also the first time that a leader of one of the major economies publicly endorsed blockchain as pivotal to technological innovation.
Illustrating the scale of this shift in attitude towards blockchain, the Communist Party’s PR wing, Publicity Department of the Central Committee (CCPPD) has released numerous instructional videos on the basics of Bitcoin, Ethereum, smart contracts and other aspects of blockchain. The CCPPD, which used to promote anti-blockchain propaganda, has now banned online posts depicting blockchain as a scam.
Despite the glowing rhetoric on blockchain, the status of Bitcoin in China remains unchanged. Although an Hangzhou cyber court recognized Bitcoin as personal digital property in July this year, commercial exchanges and companies trading Bitcoins are still forbidden.
It was reported on Friday that Binance was in talks to open an office in Beijing as part of the blockchain push, but this is yet to be confirmed. Binance was founded in China but moved out of the country due to a ban on cryptocurrency trading passed in September 2017 and still in effect.
Even if the full scope of China’s adoption of blockchain remains to be seen, the initial impression is that this is likely only a bid to garner public support for the Chinese central bank, People’s Bank of China’s (PBOC) proposed state-backed digital currency, which is expected to cut the costs of circulating paper money and facilitate better control of monetary supply.
This was evidenced by the Communist Party’s newspaper, the People’s Daily quickly moving to quell renewed enthusiasm for public cryptocurrencies by distinguishing them from the underlying blockchain:
“the rise of blockchain technology was accompanied by that of cryptocurrencies, but innovation in blockchain technology does not mean we should speculate in cryptocurrencies.”
While US lawmakers may have dismissed Facebook’s fair warning of “the technology being developed elsewhere” as scaremongering tactics to railroad approval for Libra, China’s brazen embrace of blockchain and aggressive push for hegemony is sure to spook the west into more immediate action. It may not be quite to the liking of blockchain purists, but the blockchain race is well and truly on!
Quantum computing’s impact on Bitcoin has been vastly overstated
Another race of potentially even greater, far-reaching implications is the race for quantum supremacy, which Google has claimed to have achieved in a journal published last week, titled “Quantum supremacy using a programmable superconducting processor.”
In a nutshell, what’s a quantum computer? Quantum computers store information as qubits rather than bits. Unlike bits, which can only be either 0 or 1 at once, qubits can be simultaneously 0 and 1 through a phenomenon is known as superposition, allowing quantum computers to process exponentially more information than a classical binary counterpart.
Now, what’s quantum supremacy? Quantum supremacy is said to have been achieved when a quantum computer does things that are deemed impossible for classical computers. Google claims that its 53-qubit Sycamore processor solved a complex computation, estimated to take a state-of-the-art classical supercomputer approximately 10,000 years, in just 200 seconds.
The dubious claim has attracted controversy in the quantum computing community and IBM, which also owns a 53-qubit processor, has since released a blog cogently disputing Google’s claim. IBM asserted that Google had rigged the experiment to support its claims and that an ideal simulation of the same task can be performed by a classical computer in just 2.5 days.
American theoretical physicist, John Preskill, who coined the term quantum supremacy back in 2011 concurred, “The problem their machine solved with astounding speed was carefully chosen just for the purpose of demonstrating their quantum computer’s superiority.”
How does it affect Bitcoin anyway? Among other things, quantum computing is perceived to be a threat to the way we encrypt data today using RSA (Rivest–Shamir–Adleman) algorithm, asymmetric cryptography which involves a private key and a corresponding public key. This is how we encrypt data and sign transactions in cryptocurrencies.
It has been theorized that one-day quantum computers will become sufficiently powerful to break this encryption model using a quantum integer factorization known as Shor’s algorithm, thereby revealing private keys that correspond to public keys. But Google’s 53-qubit quantum processor, even if it is as efficient as Google claims, is not going to break our binary systems.
There are plausible, even persuasive, reservations regarding effective at-scale practical application of quantum computing we’re far from dispelling. Specifically, the more qubits you add to a quantum processor, the more difficult it is to maintain quantum states. Google even resorted to experimenting with a 53-qubit processor after 72 qubits proved too unstable and intractable.
If Google or any other entity ever figures out how to make an efficient quantum computer capable of breaking encryption, compromising our private keys would be the least of our worries, as there’s no telling what miracle or mayhem such a machine could beget upon this world.
Coffee with bitcoins at long last, from Starbucks no less!
Bitcoin naysayers’ cynical “but can you buy coffee with bitcoins?” ridicule will soon become redundant in merit after Bakkt announced the launch of a consumer payments app to allow retailers to both transact and pay with bitcoins at points of sale.
Bakkt chief product officer Mike Blandina revealed in a blog post that the platform’s next mission after the successful introduction of the Bakkt Bitcoin Futures and the Bakkt Warehouse was to unlock the value of digital assets through a consumer payments app.
Blandina noted that, besides Bitcoin, the app was being designed to support a superset of digital assets, including cashbacks, rewards, and other digital tokens, allowing consumers to manage a wide-ranging digital asset portfolio and to store, transact, trade or transfer their assets.
“By driving more integration and efficiency across digital wallets, transaction processing, and payment acceptance, there are meaningful opportunities for merchants and consumers to seamlessly interact using digital assets in ways that have not been previously considered. It is often said that digital assets will be successful when consumers don’t have to think about the technology underlying them.”
Despite recent price ascendency, the inability to readily spend crypto assets is locking up value and purchasing power from the wider economy. Bakkt believes that an enterprise-grade infrastructure will enable a new form of payment acceptance at a lower cost per transaction while allowing merchants to gain access to a broader set of customers with expanded spending power.
The consumer app and merchant portal are currently in development and will be tested with Bakkt’s launch partner and one of the world’s largest coffee chains, Starbucks in the first half of 2020. Consumers are able to avail early access to the app by signing up through Bakkt’s official website.
There’s a school of thought that for Bitcoin to succeed as a store of value, it has to prove itself to have real-world utility. Bakkt certainly subscribes to it and is seeking to make headway in its drive to accelerate the commercial adoption of cryptocurrencies. It remains to be seen how effective its efforts are in cajoling merchant integration of crypto payments.
Bitcoin to teach high-schoolers about properties of money
Forget spending bitcoins. For any rational individual to even buy bitcoins, they must first understand what the heck it is. Not so much how it works, but at least how to use it securely. Several studies have revealed that this knowledge gap remains the biggest hurdle for cryptocurrency adoption.
Prior to the fervent groundswell of retail interest in late 2017 caused by price explosion, the average bitcoiner was either a cypherpunk or a libertarian who hated banks and the state, which meant that they invested a lot of effort into educating themselves and knowledge levels were fairly high.
This is no longer the case, thanks to those dizzying price highs. Most people are now aware of Bitcoin and even if most of them are misinformed, they’ve heard about it and think they know what it’s all about from the way it’s portrayed in mainstream media, which is often non-technical hogwash.
The most efficient way to address the knowledge gap is through education in schools and universities. While a number of universities are currency offering courses in blockchain and cryptocurrencies, France has become the first country to integrate the subject into the high-school curriculum.
The French education ministry, Le Ministère de l’Éducation Nationale, has included an activity that involves studying the properties of Bitcoin as part of the syllabus for high-school students taking Economic and social sciences.
The activity aims to familiarize students with the fundamentals of Bitcoin with a cursory overview of its principles of decentralization and requires students to reason whether Bitcoin could replace the euro, if it’s viable as a currency and if the trust is an essential property for a currency.
Coming on the back of the announcement of retail integration of Bitcoin payments at 25,000 sales points across the country by 2020, through this educational initiative, France exemplifies a progressive economy showing the world how to embrace a decentralized revolution.
Despite slumping as low as 7293, BTC/USD closed the last weekly session, which included a dramatic upswing of 40% late last Friday, with a 16% gain at 9557.
Although driven chiefly by news from China, the frenetic price leap beyond the 200-day average so soon after breaking down seemed to indicate short squeeze may have been in play. Further adducing the short squeeze theory was dwindling volumes at the top exchanges, with reported volumes down 90% from June.
Despite the dreaded death cross playing out, having broken out above the 200-day average, there is no immediate cause for alarm unless there is another breakdown at this level. This is corroborated by daily RSI failure swing and bullish price divergence, with RSI making a higher low for lower price low.
After multiple attempts to break clear of resistance at 0.022 BTC, ETH/BTC broke down last week, failing to trend higher as BTC flourished.
The pair has since consolidated below 0.02 BTC. Daily RSI holding off just above oversold territory and bullish MACD convergence indicates a retest of the middle Bollinger band if BTC continues to trend sideways.
If BTC should break out, ETH/BTC might struggle to keep pace and we could see a further breakdown approaching 0.0175 BTC.
While Bitcoin’s breakout adversely affected most major altcoins, Bitcoin Cash (BCH/BTC) bucked the trend to rise 15% from 0.027 BTC to 0.031 BTC. Bitcoin market dominance is marginally higher from last week, up to 67.4%.