Week of 3.29.20 - Issue #21
Welcome to the 21st edition of the ₿it Economy! Each week, I break down the top stories in Bitcoin in a simple in clear format. Enjoy!
Topics: LSAT, Funding & strike.me
The Brief:
The American economy remains in a standstill as COVID-19 continues to plague not only the nation but the majority of the planet. As an economic crisis looms, I'd like to take the time to recognize Bitcoin development in this issue. We begin with Lightning Labs who earlier in the week announced Lightning Service Authentication Tokens (LSAT) which seeks to do away with usernames and password. Second, a new report from popular Bitcoin margin exchange, BitMEX, detailing the development funding in the Bitcoin ecosystem. Thirdly, Jack Mallers, founder of Zap, announced strike.me which makes it easier for users to accept Bitcoin dips as fiat directly. Don't forget to check out the Interesting Reads and Great Listens portion of the newsletter!
S1: Lightning Labs LSAT
What is it? - On Monday, Lightning Labs, the author behind the Bitcoin scaling solution LND, has introduced Lightning Service Authentication Tokens (LSAT). Not to be confused for the Law School Admission Test, these LSATs allow services to issue authentication tokens in return for Lightning-based Bitcoin payments. Thereby relieving these services from access-limiting procedures like credit card payments and email registration.
"Developed by Lightning Labs which leverages the widely underused HTTP 402 (payment required) status code. LSATs can serve both as authentication, as well as a payment mechanism (one can view it as a ticket of sorts) for paid APIs. By leveraging LSATs, a service or business is able to offer a new tier of paid APIs that sits between free and subscription: metered, with no login, email or passwords required!"
Why it Matters?
Imagine a world where you wanted to log into your favorite social media (Facebook, Instagram, Twitter or Snapchat) and all you needed is to pay a very small fee and keep the receipt. In that world, you do away with the need for a login process so there is no more struggling to remember a password. LSAT can be used by almost any online service based in HTTP/2 or gRPC. HTTP is stands for Hypertext Transfer Protocol Secure and is the protocol used by the web client (i.e., Google Chrome, Brave Browser and Mozilla) to communicate with the web server. HTTP version 1.1. has been used for over 15 years and about five years ago version two, HTTP/2, has begun to replace it.
The authentication works similar to how cookies works now where the bits of data keep track of your actions on certain websites. These cookies are held as reference points for thee website and are retrieved as needed. However, with LSAT, the payment receipt is stored for reference to grant access to online services. This opens the door for developers to create systems where users can use the internet without the need to create a new account.
Final Take - The 402 HTTP code needed about 30 years to be ready to use. It was reserved for future use, and the future is now.
S2: Bitcoin Development
What is it? - On Tuesday BitMEX, the infamous cryptocurrency exchange and derivative trading platform, announced it will be increasing its Core Developer Grant for Bitcoin Core developer Michael Ford (aka fanquake) to 100,000. Ford who has been contributing to Bitcoin since 2012, was previously awarded a $60,000 grant in May 2019 from BitMEX owner HDR Global Trading Limited. The new grant will replace the old and support Ford's work over the next 12 months. Three days prior to this, the research arm of the exchange released a report on funding in the Bitcoin ecosystem. Per the report, Blockstream and Lightning Labs both employ 8 developers who work on the Bitcoin protocol.
Why It Matters? - Free and Open Source Software (FOSS) is critical to building trust and safety into the Bitcoin network. Bitcoin is disruptive, just as Apple disrupted mobile phones, Tesla disrupted automotive, and Twitter disrupted media and commutation. The Bitcoin ecosystem is home to two types of developers. First-layer developers who are responsible for the foundational work of improving the underlying code of Bitcoin and second-layer developers who build on these foundations. Both types of developers are crucial innovators who drive advancements in the Bitcoin industry. It is important that Bitcoin development has funding mechanism that are incentive with the goals of the protocol and its users. The strength of open-source is the number of people spreading and improving software.
Final Take - Without developers, there is no technological breakthrough. Without breakthrough, there is no disruption
S3: ZAP Announces strike.me
What is it? - The Lightning Network wallet Zap founder Jack Mallers has announced a desktop tipping product to complement the Strike payments app. As a refresher, Strike allows customers to make payments on the Lightning Network using just a debit card or bank account. This technology was built on top of Olympus, the team's fiat-to-lightning gateway. Similar to the cell app, the tipping function permits senders to present both bitcoin or dollars whereas customers obtain dollars of their financial institution account.
In this case, every Strike username is routinely given a public tipping web site. To allow the customers to see a smooth Venmo-like process, the team sells desks on the backend.
“Each Strike consumer is given a public area at strike.me,” Mallers stated. “We’re utilizing Lightning for actually quick on-line settlement of worth transfers. … It’s additionally helpful for privateness on the sender’s aspect.”
The firm is currently working with two cannabis companies in the state of Colorado.
Why it Matters? - The video above shows how easy it is to pay on the lightning network. Strike works by converting and settling bitcoin payments on behalf of merchants, so retail outlets never have to touch the asset. Though this alludes they are short bitcoin, their live trading algorithms keep their exposure flat. Though technical barriers, the Zap team decided that it would be best to neutralize the user's need to interact with the network directly.
Final Thought -This technology lowers the barrier for entry to Bitcoin for friends and family.
Market Watch
- Total Market Capitalization: $186.65B
- Bitcoin Market Cap: $124.01B
- BTC Dominance: 66.48%
- High: $6,831.91
- Low: $5,889.47
- ATTOW: $6,789.40
Bitcoin saw an ~8% jump on the week as it briefly broke the $7,000 psychological barrier. This is third consecutive green candle on the weekly as the digital asset has seen a massive retracement since yearly lows near $3,750. However, there has been no indication that support has been reclaimed as Bitcoin continues to trade between $5,800 - $6,900. A break and close above $7,100 would indicate bullish momentum and open the door to $8,000. Albeit, there is a lot of resistance that could see the price dip into the $5,800 - $6,300 range. A breakout and daily candle close above $7,000 would invalidate any bearish theories about Bitcoin over the coming weeks as it looks to climb back to the $7,800 mark.
Bitcoin futures Open Interest (OI) has begun to climb but is nowhere near levels seen prior to the crash three weeks ago. This could allude that investors are comfortable with taking long or short risk. In risk-off scenarios, it is common for firms to close all exposures thus reducing open interest. An uptick highlights investors are looking to dip their toe back into the water.
On the other hand, declining daily volume of Bitcoin combined with relatively stagnant open interest in futures could lead to a further price decline. As most large players have shifted to using the OTC markets to move sizable positions, spot volumes are an important indicator of actual demand from retail traders. Moreover, volume speaks to the sincerity of the price action it is tied to.
This period of low volume suggests bulls are hesitant to inject buy volume into Bitcoin. As recent history suggests, the bears will come back with more volume to the downside.
Another interesting indicator to look out for is the average size of exchange deposits, or the total count of transfer to exchange address. This chart from Glassnode shows the seven-day average of the number of transfers to exchange addresses, or unique daily exchange deposits.
The decline number of transfers in addition to a downward trending transaction count does not bode well for the short term price outlook. But there remains a positive long term outlook as Bitcoin's halving is less than 45 days away in mid-May. The process aims to curb inflation by reducing the block rewards per block mined by 50%. Additionally, the upcoming halvings for Bitcoin Cash (BCH) & Bitcoin (BSV) will see miners direct more hash power from those chains over to Bitcoin to enjoy the one-month window where it will still have a 12.5 native unit block reward.
Announcements
- MyNode v0.2.0 Released - Link
- Samourai Whirlpool CLI Client v0.10.3 Released - Link
- Samourai Whirlpool Desktop GUI v0.10.1 Released - Link
- LND Merge to Master Support for PSBTs - Link
- Binance announces Bitcoin Mining Pool - Link
- BlueWallet Announces New App Updates - Link
Interesting Reads
- Bitcoin Optech #91 - Link
- Dear Bitcoiners - Link
- Bitcoin Is A Rally Cry - Link
- Maybe We Shouldn't Use Zoom After All - Link
- Class Action Lawsuits Filed Against 11 Bitcoin Companies - Link
- What Is Happening To Money? - Link
Great Listens
- Tales From The Crypt #147: Alex Gladstein - Link
- Hidden Forces #130: Gillian Tett - Link
- Hidden Forces #128: George Selgin - Link
Final Quote
Have a great week! See you next Sunday.
If you liked this post from The ₿it Economy by @rsarrow, why not share it? Use the link below to share on your social media platforms. Want to get in touch? Find time to connect here.