Week of 3.15.20 - Issue #19
Welcome to the 19th edition of the ₿it Economy! Each week, I break down the top stories in Bitcoin in a simple in clear format. Enjoy!
Topics: Nodes & Markets
The Brief:
The last two weeks have been extremely difficult for the global economy, governments, communities, and the capital markets. Trillions of dollars are being printed around the world and injected into the market, causing many to question what the global economy is going to look like in a few months. The question is quite alarming and it appears that the use cases of digital assets such as Bitcoin will be put to the test. It is shaping up to be a bumpy ride as we have entered uncharted territories.
During these crazy times, with the COVID-19 virus in the wild, and the global economy going haywire, I decided to construct this issue on the lighter side. Earlier this week, Jameson Lopp of Casa, open-sourced the code for their plug-and-play node. Below I shed some light on the differences between out of the box and DIY implementations.
As for the reads, I highly recommend you check out all of them this week. They range from civil liberties to capitalist controls. As always, if you have any questions, comments or feedback feel free to reach out.
S1: Casa Open Sources Node
What is it? - Casa, a bitcoin custody provider and former manufacturer of hardware nodes for the lightning network, has released it’s code for their casa node. Earlier this year the firm announced that it was getting rid of its physical node implementation as it shifted focus to it's bitcoin key management subscription service, Keymaster.
The code is open sourced under the MIT License where anyone is free to "use, extend, and improve" it. The prerequisites include:
USB Keyboard
External Monitor and HDMI Input
Internet Router with Open Ethernet Jack
Magnetic Small/Mini/Precision Phillips Head Screwdriver
Checkout the full post from the Casa team here.
Why it Matters? - Before we delve in the importance of running a Bitcoin node, I want to explain the differences between a full and light client. To start a node is any computer that connects to the blockchain network. A full node is a node that fully enforces all of the rules of the blockchain, while a light client or lightweight node is referencing a trusted full node's copy of the blockchain. Therefore, one can transact on the Bitcoin blockchain without downloading an entire copy of the blockchain.
And for those who want to go a little deeper into why running a node is important, checkout the Q&A below with Andreas Antonopoulos.
Running a Bitcoin node comes with a umber of advantages. For one, it gives you a significant amount of valuable knowledge regarding the inner workings of the Bitcoin blockchain. With plug-and-play options available, setting up a Bitcoin node is not very difficult and will expose you to the protocol in a way that you would not have experienced otherwise. Secondly, when you run a Bitcoin node, you are further decentralizing the network and thus helping to make it more robust. You have some skin in the game and are playing your role in supporting the network. Finally, when you transact over the Bitcoin network without your own full node, you are placing trust in other people. However, with your own node, you can verify and process payments without having to rely on intermediaries.
Currently, there are two ways of running your own Bitcoin node:
Do-it-yourself (DIY)
Purchase a plug-and-play device.
Checkout this review of the current plug-and-play offerings out there from Bitcoin Magazine.
As for DIY, if you want to run a node on your PC or laptop, it is as easy as downloading the Bitcoin Core software here and let it sync (warning it takes a while). To start, you will need a computer which currently runs the latest version of its operating system. Additionally you will need the following:
200 GB of free disk space, accessible at a minimum read/write speed of 100 MB/s
2 GB of memory (RAM)
Broadband Internet connection with upload speeds of at least 400 kilobits (50 KB/s)
Unmetered connection with high upload limits
Minimum 6 hours a day to let full node run
Other DIY implementations include:
Pierre Rochard's Node Launcher - Easy to setup Bitcoin Lightning on macOS or Windows desktop/laptop.
RaspiBlitz by Fulmo - fully operating Bitcoin and Lightning Network node with a customizable open-source operating system.
myNode Community - Aims to be the easiest way to run a dedicated, easy to use, Bitcoin Node and Lightning Wallet.
A full node allows you to participate in the bitcoin network, verifying transactions and relaying to the network. Moreover, it allows you to act in a completely trustless way. By running your own node, you personally protect yourself from double spending, fraudulent transactions, malicious inflation, and much more. Finally, per Clark Moody's Bitcoin Dashboard, there are currently 10,086 reachable Bitcoin nodes.
Final Take - Casa among other's continue to value personal security and open source over profits.
Market Watch
- Total Market Capitalization: 166.60 billion
- Bitcoin Market Cap: 110.63 billion
- BTC Dominance: 66.30%
- High: $6,189.14
- Low: $5,040.32
- ATTOW: $6,012.85
After last weeks massive BTC price drop, the beginning of the week saw a continuation in price decline before stabilizing $5,000 - $5,600. On Thursday, the price began to see a rebound as it rose above $6,000. The remainder of the week saw price volatility as the asset rose to levels near $7,000 and fell below $6,000. This volatility has led to an increase in transaction volume, signalling increased economic activities. Investors have been able to utilize the quick price swings to exploit arbitrage opportunities. Arbitrage is essentially buying bitcoin in one market and simultaneously selling it in another market for a higher price, thereby profiting from the temporary difference in prices.
As for the options market, the record volumes in mid-January are long gone for US regulated providers CME and Bakkt. The latter, has seen a nosedive in volume where it last reported activity on February 27th. The coronavirus outbreak has forced many nations around the globe to implement lockdowns, bringing their economies to a standstill.
An interesting metric to keep an eye on is the HODLer Net Position Change metric from Glassnode. This metric shows the monthly position change of long term investors and indicates when HODLers cash out (negative) and when net new positions are accumulated by HODLers.
As the price has approached February, long term investors begun to halt bitcoin accumulation. After last weeks crash, the indicator shows a large increase in accumulation from long term investors, thus signalling confidence in the current price levels as a market bottom.
Another metric that has been receiving a lot of attention of late is the Puell Multiple. Most metrics aimed at timing or quantifying Bitcoin's market cycles, from a fundamental perspective, have by and large focused on the velocity of value settled on chain. Nonetheless, Puell Multiple offers a way to gauge market cycles from a mining profitability/compulsory sellers' perspective. It takes total miner revenue and adjusts by its yearly moving average.
The signal appears to show the asset is undervalues as it slipped to 0.41 on March 16, the lowest level since January 17, 2019. Currently, the metric is residing just above the green zone range of 0.3 and 0.5.
For this week, the resistance area is quite clear and found between $6,500 - $6,900. As it stands, bearish retest of the previous support near $5,700 looks more likely. However, if this level continues to hold, expect the price to retest the resistance levels over the week.
Announcements
- Bakkt Completes $300 Million Series B Financing - Link
- Ride The Lightning (RTL) v0.7.0-beta released - Link
- Opera partners with Wyre to let users buy BTC with Apple Pay
- Congress to pass bill allowing Fed to issue $4 trillion in liquidity - Link
- US Government Discussing Harnessing Location Data to Combat COVID-19 - Link
Interesting Reads
- Protecting Civil Liberties During a Public Health Crisis - Link
- This Is Not Capitalism - Link
- Understanding Bitcoin Market Participants - Link
- Bitcoin Mining - Link
- Raoul Pal's Current Market Portfolio - Link
Great Listens
- Pomp Podcast #241: Caitlin Long - Link
- What Bitcoin Did #202: Giacomo Zucco - Link
- Base Layer #120: Mark Yusko - Link
Final Quote
Have a great week! See you next Sunday.
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