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After the Fork: How Competing Bitcoin Cash Blockchains Might Wage War

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Long-term themes review October 29th 2018

Eoin Treacy's view
FullerTreacyMoney has a very varied group of people as sUBScribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

Let me first set up the background; I believe we are in a secular bull market that will not peak for at least another decade and potentially twice that. However, it also worth considering that secular bull markets are occasionally punctuated by recessions and medium-term corrections which generally represent buying opportunities.

2018 has represented a loss of uptrend consistency for the S&P500 following a particularly impressive and persistent advance in 2016 and 2017. Many people are therefore asking whether this is a medium-term correction or a top. There is perhaps no more important question so let’s just focus on that for the moment. Continues in the Subscriber's Area.



Video commentary for November 15th 2018

Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.

Some of the topics discussed include: China's downtrend losing momentum, Europe under pressure, Pound fading from the upper side of its range,  discussion of how this medium-term correction might be resolved.


2019 Markets Outlook: Something wicked this way comes?
Thanks to a subscriber for this report from UBS which may be of interest. Here is a section:

Eoin Treacy's view
A link to the full report is posted in the Subscriber's Area.

The big question at The Chart Seminar this week was whether the condition that has developed on the stock market in 2018 is a medium-term correction in a secular bull market or whether this is the end of the bull market that began in 2009 on Wall Street.


After the Fork: How Competing Bitcoin Cash Blockchains Might Wage War
This article by Rachel Rose O'Leary for Coindesk may be of interest to subscribers. Here is a section:
In effect, Wright sees the upcoming split in terms of bitcoin’s longest chain rule – the underlying bitcoin consensus mechanism that defaults to the longest chain in the event of multiple blocks being found simultaneously.

When applied to a blockchain split, what this means essentially means is a fight to the death between the competing chains, where the last one standing would be considered the “true” bitcoin cash by nodes.

For example, both implementations have declined to add so-called “replay protection,” or code that allows funds to be safely spent when a split occurs.

“Neither Bitcoin SV nor Bitcoin ABC have implemented transaction replay protection, as the intention is for only one chain to survive,” nChain, the software company behind Bitcoin SV, wrote in a press release published earlier this month.

This means that without special precautions, users could lose funds while transacting on a split chain. Similarly, hackers can exploit the vulnerability to extract funds from exchanges.

“Users potentially stand to lose money because of this decision,” Chris Pacia, a developer for OpenBazaar, told CoinDesk, adding: “Not adding replay protection is a dick move.”

And there are other ways that the two blockchains could continue to wage war following the fork – especially if one camp continues to dominate the hash power.

At the time of writing, the prevailing hash rate is showing a preference for the SV side. If the preference continues, there’s a host of ways that Bitcoin SV could try to keep ABC from operating.

Eoin Treacy's view
I’m not going to pretend I have a clear understanding of what is being discussed in the above article. I certainly could not explain it to a dispassionate third party. However, there is one clear conclusion we can reach, an attack is underway on the confidence people have in bitcoin and that is being reflected in the price. Continues in the Subscriber's Area


China's Growth Engines Lose $32 Million a Minute as Markets Sink
This article by Bloomberg News may be of interest to subscribers. Here is a section:

Nonstate companies have lost at least $992 billion in market value since mid-June, or about $32 million for every minute of trading, according to data compiled by Bloomberg and WisdomTree Investments Inc. In October their shares tumbled at the fastest pace in more than three years relative to companies with government ownership. Local corporate borrowers, almost all of them privately owned, defaulted on a record $6.6 billion of debt in the third quarter. At least 57 nonstate businesses have accepted government bailouts in 2018. Such a wave of quasi nationalizations would have been unthinkable just a few years ago.

The pain has been felt at companies large and small—from internet behemoth Tencent Holdings Ltd. to Jiaxing Linglingjiu Electric Lighting, a producer of thermal bulbs whose owner is weighing whether to ditch the business to go farm a plot of land in China’s rural northeast. “When we meet with fellow factory owners, we don’t ask, ‘How’s business?’ like in previous years,” says Xu Xihong, who started Jiaxing Linglingjiu in 2009 after moving into a factory abandoned by a bankrupt state-run manufacturer of electric fans. “Now it’s ‘Do you think you will make it through the year?’ and ‘When are you going to get evicted?’ ”

Donald Trump’s tariffs and the Federal Reserve’s interest-rate hikes have played a role, but the biggest triggers have been local. By far the most important: the Chinese government’s almost two-year campaign to rein in the country’s $9 trillion shadow banking industry—financial companies that aren’t regulated like traditional lenders. While the clampdown was designed to make China’s financial system safer and more transparent, it’s crimped a key funding channel for private-sector companies that lack access to state-run banks. Faced with a drying up of credit and the country’s weakest economic expansion since 2009, more small businesses are defaulting on debt or liquidating.

Eoin Treacy's view
The availability of credit and how it is disbursed throughout the economy has been a point of contention in China for decades. The simple fact is that the government and banks do not make enough available but then impose tough growth targets on the regions to meet which encourages credit expansion by any means necessary. Continues in the Subscriber's Area.

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