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Bitcoin Network Fundamentals Could Sustain $265,000 Price, CryptoQuant CEO Explains

The CEO of analytics firm CryptoQuant has explained how the Bitcoin network fundamentals could support a market cap three times the current size.

Bitcoin Hashrate/Market Cap Ratio Could Reveal Ceiling For Cycle

In a new post on X, CryptoQuant founder and CEO Ki Young Ju has talked about what the network fundamentals could reveal about how much more market cap Bitcoin can sustain.

BTC is a cryptocurrency that runs on the proof-of-work (PoW) consensus mechanism, meaning that validators called miners compete with each other using computing power to get the chance to add the next block to the blockchain.

Miners have to pay constant electricity costs to run this computing power. Generally, these chain validators do so by selling their block rewards. These rewards are fixed in BTC value and given out at a more or less constant rate, so the main variable in miner finances is the asset’s USD value.

Mining-related economics are very much related to the cryptocurrency’s price. A metric central to the miners is the Hashrate, a measure of the computing power this cohort has connected to the Bitcoin blockchain.

Below is a chart that shows the trend in the 7-day average value of this BTC indicator over the past year.

Bitcoin Mining Hashrate

As the graph shows, the Bitcoin Hashrate has been riding an uptrend during this period, largely due to the rally that the asset’s price has enjoyed in this window.

To relate this fundamental metric with the price of the asset, the CryptoQuant CEO has referred to the “Hashrate/Market Cap Ratio,” which is an indicator that keeps track of how the market cap (that is, the total valuation) of the cryptocurrency compares against its Hashrate.

Here is the chart shared by Ju that shows the trend in this metric over the last few years:

Bitcoin Hashrate/Market Cap Ratio

The graph shows that the Bitcoin Hashrate/Market Cap Ratio has been at low levels compared to the highs the metric achieved during the 2021 bull run.

This is despite the fact that the asset’s price is currently at similar levels to back then. The reason behind this trend is that the network’s Hashrate is now more than three times what it was then.

If the ratio’s high from the previous cycle top is where the cycle peak will also be observed this time around, then it means that the asset’s market cap could increase over three times from its current value.

Based on this, Ju suggests that the current network fundamentals could potentially sustain a price of $265,000.

BTC Price

At the time of writing, Bitcoin is trading at around $62,300, up more than 9% over the past week.

Bitcoin Price Chart

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How To Mint BRC-20 Tokens On The Bitcoin Network

BRC-20 tokens open doors for developers to build their own decentralized applications (dApps) with unique economies on the Bitcoin network. This fosters community engagement through internal currencies, and attracting investment through innovative token sale structures.

BRC-20 tokens are fungible tokens built on the Bitcoin network using the Ordinals protocol. It also utilizes inscriptions containing JSON (JavaScript Object Notation) data to facilitate the deployment of token contracts, minting tokens, and transferring tokens. Presently, the BRC-20 token standard offers the ability to create a BRC-20 token using the deploy function, mint a specified quantity of BRC-20 tokens using the mint function, and transfer a designated amount of BRC-20 tokens through the transfer function.

BRC-20 and ERC-20 share some similar characteristics and functional concepts, but they are not identical due to their different underlying blockchains and implementation details. One of the differences is that BRC-20 tokens operate on the Bitcoin blockchain, while ERC-20 tokens reside on the Ethereum blockchain. This leads to differences in technical implementations and transaction fees.

Related Reading: How To Buy And Trade BRC-20 Tokens On The Bitcoin Network

Similar to ERC-20 tokens, BRC-20 tokens are fungible, meaning they can be exchanged on a one-to-one basis with equal value. They can be created, transferred, and traded on the Bitcoin network using decentralized marketplaces like Magic Eden with compatible wallets and decentralized exchanges that support the BRC-20 standard.

BRC-20 tokens breathe vitality into the Bitcoin network, acting as programmable extensions that expand the scope beyond basic transfers. They empower the Bitcoin network by enabling the development of DApps, fostering communities, and facilitating ownership of real-world assets. This dynamic frontier presents exciting opportunities for engagement, incentives, and innovation. 

However, it is essential to navigate the technical intricacies and embrace the evolving infrastructure. BRC-20 tokens, still a work in progress, possess tremendous potential to reshape the future of Bitcoin, unveiling a multitude of tokenized possibilities along the way.

Now, let’s dive into the exciting world of building your own BRC-20 tokens! As we discussed, platforms like Magic Eden offer a gateway to creating and trading these digital assets.

Creating BRC-20 Tokens On The Bitcoin Network

Creating BRC-20 tokens involves defining the token’s parameters, such as its name, symbol, and total supply, as well as any additional functionality you want to incorporate, such as token burning or minting restrictions. Once the smart contract is written, it needs to be compiled into bytecode and deployed onto the Bitcoin blockchain using the platform’s provided tools. This deployment process usually involves paying gas fees to execute the necessary transactions. Platforms like Magic Eden enable users to create their own BRC-20 Tokens.

First, visit the Magic Eden homepage, and click on “Connect Wallet” at the top right corner, as shown in the image below:

For the best wallets to use for BRC-20 tokens on the Bitcoin network, check here.

Bitcoin BRC-20

To initiate the creation of your BRC-20 token, it is essential to deploy it first. Adhere to the following instructions to proceed:

Next, click on the “Inscribe” button. (The Inscribe button pops up after you click on the “Mint” icon situated towards the top left of the screen).

Bitcoin network

Next, Click on the “BRC-20 ” tab at the top of the screen.

Bitcoin

Then, follow these instructions:

 

Ticker: Select a four-letter phrase to serve as the unique identifier for your token. For instance, widely recognized BRC-20 tokens have utilized tickers like ORDI or OXBT. Establish the maximum quantity of tokens that will be available for minting. Specify the highest number of tokens that can be minted in a single transaction. Select the desired parameters and click on “Next”.

Bitcoin BRC-20

Choose the desired Bitcoin Network Fee from the options available, such as Low, Medium, or High. After making your selection, proceed by clicking the “Inscribe” button. (Ensure that the chosen ticker is not already deployed to avoid transaction failure. Magic Eden will automatically check this unless instructed otherwise).

BRC-20 minting

Now, wait for the transaction to be confirmed by the Bitcoin network. Confirmation times may vary.After the confirmation, check your wallet. Upon successful confirmation, you will receive a “Deploy” inscription, signifying that you can proceed to mint your tokens. The provided example illustrates a “Deploy” inscription within the Xverse wallet.

Bitcoin Magic Eden

Minting Your BRC-20 Token

Having successfully deployed your BRC20 token, follow these instructions to mint it. Navigate back to the ‘Inscribe Ordinals’ modal located on the Magic Eden homepage. Within the modal, click on the “BRC-20 Mint”  tab to proceed.

Magic Eden

Enter the four-letter phrase that you deployed earlier, indicate the desired quantity of tokens you intend to mint, and specify the number of mint inscriptions you wish to generate.

Note: The maximum number you can mint per transaction has to be the same with the value set in the “Limit per mint” during the deploy process. Now, click on the “Next” button and select the network fee. After selecting the desired fee rate, click the “Inscribe” button. In the following example, 63 BRC-20 tokens are being minted in three batches of 21 each.

BRC-20 tokens

A set of mint transaction links will be provided. Please note that confirming the mint transactions once again may take some time.

Bitcoin network

After confirmation, you will receive the mint inscriptions in your connected wallet.

BRC-20 tokens minted

Congratulations, you have successfully created your first BRC-20 Token!

Conclusion

BRC-20 tokens offer fungible tokenization capabilities within the Bitcoin network, enabling a range of applications and use cases. As the blockchain industry progresses, both NFTs and BRC-20 tokens assume crucial roles in shaping the trajectory of digital ownership and decentralized finance (DeFi).

BRC-20 tokens introduce fungible tokenization capabilities within the Bitcoin network, providing the ability to create and exchange interchangeable tokens. This opens up a wide array of possibilities for various applications and use cases within the blockchain industry. As the blockchain ecosystem continues to advance, both NFTs and BRC-20 tokens play pivotal roles in shaping the direction of digital ownership and decentralized finance, driving innovation, and paving the way for a more inclusive and decentralized financial landscape.

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How To Buy And Trade BRC-20 Tokens On The Bitcoin Network

What are BRC-20 Tokens?

BRC-20 tokens are a novel standard on the Bitcoin blockchain, BRC-20 tokens were inspired by Ethereum’s ERC-20. Like Ethereum’s ERC-20 strands for Ethereum Request for Comment, BRC-20 also strands for Bitcoin Request for Comment.

BRC-20 tokens allow the creation, minting, trading, and transfer of fungible tokens or assets on the Bitcoin blockchain through the Ordinals protocol. The Bitcoin Ordinals protocol is a numbering system that allows users to attach extra data to satoshis, the smallest unit of Bitcoin.

The process of attaching extra data to satoshis is called inscription, BRC-20 tokens do not need smart contracts to execute transactions as ERC-20 tokens do, their transactions are done through JSON inscriptions on satoshis through Bitcoin Ordinals.

Differences And Comparison Between BRC-20 And ERC-20

Ethereum’s ERC-20 might have inspired the creation of BRC-20 on the Bitcoin blockchain, but make no mistake, they are not the same, and we are going to explore that in this section of this article.

Operation: One of the key differences between BRC-20 and ERC-20 is that BRC-20 tokens find their home within the Bitcoin blockchain while ERC-20 operates on the Ethereum blockchain.

Implementation: BRC-20 and ERC-20 are both implemented differently; however, BRC-20 is experimental, meaning it has not undergone the BIP process. It only implements changes in the Bitcoin protocol, while ERC-20 has undergone the EIP process, which was approved by the Ethereum community before implementation after being scrutinized.

Security: They are both secure as they are both secure by the top two blockchains in the crypto space, but BRC-20 is secured by the Bitcoin blockchain and ERC-20 is secured by the Ethereum blockchain.

High Gas Fee Or Transaction Fees: They both have high gas fees if you are trading on decentralized exchanges (DEXs).

Wallets: Their wallets are different, you can store your BRC-20 token on wallets that support the Bitcoin Taproot upgrade like Unisat, Xverse, CoinW, and Alex. While ERC-20 tokens are stored on Ethereum-supported wallets like Metamask, Exodus, Trust wallet, Atomic, MyEtherWallet, and all EVM compactable wallets

Smart Contract functionality: BRC-20 tokens do not rely on smart contracts to execute transactions, but ERC-20 tokens do.

Token Value Drive: BRC-20 tokens are token values driven by inscriptions, and ERC-20 token values are driven by utilities and speculations.

Fungibility: BRC-20 tokens are semi-fungible because they are only interchanged in set increments. For example, BRC-20 tokens are being sold in sets, so you can’t buy 1003 xBRC-20 tokens (x being the token) if the only people sell decide to sell in sets of 250, 500, 750, and 1000 depending on how many tokens they want to sell. Meanwhile, ERC-20 tokens are fully fungible because they can be exchanged in any quantity.

Functions: The BRC-20 token standard is majorly to create meme tokens currently, while the ERC-20 token standard is used for a good number of fungible tokens on Ethereum, including stablecoins, governance tokens, wrapped tokens, and utility tokens.

Pros of the BRC-20 Token Standard

The fact that BRC-20 tokens are built on the most secure blockchain in the crypto space Bitcoin, should help you understand these tokens are going benefit from the security that the Bitcoin Blockchain provides.

The interoperability with the Bitcoin network is one of the major advantages of the BRC-20 tokens, as they enjoy and leverage the widespread acceptance of Bitcoin as the most successful crypto, which has contributed to the BRC-20 token’s overall success. Also, this compatibility with Bitcoin gives the BRC-20 standard access to utilize the existing infrastructure the Bitcoin network already has, including its wallets and exchanges.

BRC-20 standard is still in its early stages, so there is huge potential for growth in the future, and as more people keep adopting and investing in BRC-20 tokens 

Cons of the BRC-20 Token Standard

In the same way, as the BRC-20 token standard enjoys the benefits of the Bitcoin network, they are still going to be affected in the areas where Bitcoin lags behind. This is because Bitcoin is not as scalable as some other blockchains like Ethereum. As BRC-20 tokens keep gaining popularity and awareness there are concerns about congestion, which could lead to potential higher gas or transaction fee issues.

Another consideration is that BRC-20 tokens run on ordinals protocol, a protocol that is still in its early phases of development, which means there is a possibility of it being vulnerable or having glitches as the technology evolves.

The Bitcoin Request for Comment (BRC-20) token standard is still in its early stage of development, so it is safe to say it is still semi-fungible compared to the ERC-20 token standard. It has some limitations, like it being sold and bought in sets, you are limited to what is available in the DEX marketplace, and you can’t buy any amount you want, whether in large or small quantities.

BRC-20 Tokens DEX Exchanges

This article is going to cover how to trade Bitcoin Request for Comment (BRC-20) tokens on UniSat, the most used decentralized exchange (DEX) to trade BRC-20 tokens. You can also check out other DEX like Xverse and Alex.

How To Install And Set up UniSat Wallet 

To trade on a decentralized exchange (DEX) you need a wallet, go to your Chrome browser and search for the UniSat Wallet extension as shown below, click on “Add to Chrome” to download and add the UniSat Wallet extension to your Chrome browser.

Unisat wallet

Click the “Create new wallet” button to create your UniSat Wallet.

Bitcoin Unisat

Create your password, use a password you can remember, as you would need your password to make transfers and click on the “Continue” button. The Secret Recover Phrase page will pop up. Write down your secret phrase and keep it in a safe place because anyone who has access to your secret phrase has access to your wallet. Then click on “Continue”.

Bitcoin BTC-20

Expect you are a crypto genius I would advise you to leave the Step 2 page the way it is, just click on “Continue”. The“Compatibility Tips” will pop up check the boxes and click on “Ok”

BRC-20

You have now successfully created your UniSat wallet, where you can receive, send, and buy crypto.

Unisat

When you click on “Receive” you will be given a QR code that you can scan on your phone and also an option to copy your wallet address manually. 

Wallet

When you click on “Send”, you will see where to fill in the Recipient address you want to send your Bitcoin to, and underneath it is where you will input the amount of Bitcoin you want to send. You can choose the transfer speed you want, but note that the faster the transfer, the higher your gas fee or transaction fee.

Bitcoin

I would not recommend that you use the “Buy” feature as it is too expensive, and it is better to buy your Bitcoin on a centralized exchange and send it to your UniSat wallet.

How To Buy, Sell, and Trade on UniSat 

To buy, sell, and trade BRC-20 tokens you need Bitcoin in your wallet for gas fees and Bitcoin to buy the BRC-20 token. So go to any centralized exchange of your choice like Binance, OKX, or ByBit to buy your Bitcoin, copy your UniSat wallet, paste it into the recipient address on the centralized exchange, and send the Bitcoin.

Now that your wallet has been funded it is time to trade, go to the UniSat website, and click on “Connect”.

BRC-20 DEX

Click on “UniSat Wallet”, and connect your UniSat Wallet.

Connect Unisat wallet

Once your UniSat Wallet is connected, Click on “brc-20”, as shown below, to see the full list of BRC-20 tokens you can trade on UniSat. 

Bitcoin wallet

Click on any of the BRC-20 tokens you which to buy, for example, I clicked on the “meme” token below. There are buttons on the top right of the screenshot circled in red “View” and “Trade”.

BRC-20

If you click on View, it will take you to OKLINK where you can see the meme BRC-20 inscription with all its details, Total Supply, Limit per mint, Holders, Minted tokens, and Price.

Trade tokens

When you click on Trade, it will take you to the UniSat Marketplace, where you will see all the listed meme token inscriptions you can buy.

Bitcoin BRC-20

Click on any of the sellers that have the exact number of meme inscriptions you want to buy or any of the sellers that come close to how many meme inscriptions you want to buy. After selecting a seller, the buy page below with the “Buy Now” button will pop up.

BTC network

Click on “Buy Now” and the confirmation page to confirm your order will pop up, click on “Confirm” and you have bought the BRC-20 token.

BRC-20 wallet

After buying your BRC-20 and you want to sell, go to the marketplace, click on “my brc-20”,  click on the inscription you want to sell, and then click on the list.

Bitcoin

Click on the plus button, input the exact number you like to sell, and click on “Next”.

BRC-20

Click “Next again”.

Bitcoin

“Sign and pay”, and “Done”,  your inscriptions will be listed. When your order gets picked up, your inscription will be sold, and the money will be transferred to your wallet.

Trading tokens

Use CoinW To Track The Price Of Your BRC-20 Tokens

CoinW is a centralized crypto exchange where you can track your BRC-20 and use the charts to make well-informed decisions on the token you want to buy.

Coinw bitcoin

To search for BRC-20 tokens, click on “Market”, click on “Hot”, and then click on “BRC-20”, as shown below.

Charts

For example, I clicked on ORDI, as you can see in the chart below.

BRC-20 charts

Here is another example with RATS, another BRC-20 token on the list.

Bitcoin

Conclusion

In conclusion, BRC-20 tokens provide a novel avenue for tokenization within the Bitcoin blockchain, expanding its utility beyond traditional cryptocurrency transactions. They offer a seamless integration of additional data onto satoshis, enabling a broader range of use cases and applications. 

With BRC-20 tokens, the Bitcoin ecosystem gains enhanced functionality and opens up possibilities for innovative decentralized finance (DeFi) solutions. By leveraging the Ordinals protocol, BRC-20 tokens contribute to the growing diversity and maturity of the blockchain industry as a whole.

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Bitcoin Mining Difficulty Hits New Record High With 5% Rise

The Bitcoin mining difficulty has witnessed another increase in 2023, bringing the metric to a new all-time high. The Bitcoin “difficulty” is a vital aspect of the network that controls the rate at which new blocks are added to the blockchain at a given time.

Bitcoin Mining Difficulty Surges To A New High Of 67.96T

According to data from BTC Blockchain Explorer, the Bitcoin network experienced a significant adjustment at block height 818,496. This caused the blockchain’s difficulty to soar by 5.07%, reaching a new all-time high of 67.96 T.

The mining difficulty is an essential feature that measures how much power is required to verify transaction blocks on the Bitcoin blockchain. An increase in mining difficulty value suggests higher demand for the Bitcoin network, while a lower difficulty value implies that there are fewer miners on the network.

It is worth noting that the metric has been on an upward trend in the past few weeks. In fact, the recent mining difficulty value represents the sixth consecutive increase in the last six adjustments.

Interestingly, the new mining difficulty value surpassed the early projections for the blockchain. Initially, the Bitcoin mining difficulty was only expected to increase by about 3.8% to 67.14 T in the latest adjustment.

The network hash rate, which measures the total computing power for mining BTC, has also increased. According to BTC Blockchain Explorer, the current average hash rate for the Bitcoin network is 504.8 EH/s, a 3.76% increase from a previous hash rate of 486.5 EH/s.

Some of the factors contributing to the increasing Bitcoin mining difficulty are BTC’s recent price performance, the recent surge in network activity, and the spike in transaction fees. And as the metric continues to rise, it appears that miners will continue to face the challenge of maintaining profitability. 

BTC Price Overview

As of this writing, Bitcoin is valued at $37,510, reflecting a 0.6% price increase in the past day. While the premier cryptocurrency seems to be drifting away from the $38,000 price mark, it has managed to maintain most of its profit on the weekly timeframe.

According to data from CoinGecko, the Bitcoin price has swelled by more than 2.7% in the past seven days. Meanwhile, the market leader has registered a 10% increase in the past month, emphasizing its strong performance in November.

Bitcoin remains the largest cryptocurrency in the sector, with a market capitalization of over $733 billion.

Bitcoin Mining

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Another Bitcoin Metric Is About To Reach A New All-Time High Despite The Bear Market

The price of Bitcoin has taken a beating in the past month. The leading cryptocurrency by market cap is down by more than 11% from its price in July and has lost more than $50 billion in market cap since then. 

While the price plunge has been painful for investors, Bitcoin miners have also been feeling the sting as mining revenue per computing power has been dwindling for the past few months. On the other hand, Bitcoin’s hashrate has soared to high levels as mining farms continue to come online.

Bitcoin Hashrate Reaches All-Time Highs Despite Bear Market

Over the last year, Bitcoin’s hashrate (the total combined computing power of miners) has almost doubled. Data from Blockchain.com shows that the Bitcoin network hash rate surpassed 414 terahashes per second (TH/s) for the first time on August 16. 

This metric has since retraced to 390 TH/s, but it is expected to rise further in the coming weeks as miners bring on more computing power to break even on their mining operations. The higher the hashrate, the more difficult it becomes to mine BTC and earn rewards. This means that miners are now making less BTC per terahash of computing power than ever before. 

Data from Hashrate Index shows this figure is now at $0.06016 per terahash/second per day. In comparison, this figure was at $0.08124 on May 8 during the rise of Bitcoin Ordinals and Inscriptions. A further decline from here would see mining revenue fall below the lowest point in November 2022.

How Miners Are Adapting To Stay Profitable

The Bitcoin mining industry has proven itself resilient, even during the depths of the crypto winter. According to data from investment information platform MacroMicro, the current average cost to mine a BTC stands at $45,877 with the current price of BTC now at $25,936. 

Bitcoin price cap chart from Tradingview.com (Metric)

To remain profitable with the rising hash rate, Bitcoin miners have had to adjust their operations. Publicly traded mining companies like Marathon Digital and Riot Platforms have had to raise about $440 million through stock sales. 

Bitcoin miners have also avoided selling their $900 million BTC, as it could trigger a major selloff from investors. While previous on-chain data have shown miners sending a significant amount of coins to exchanges, miners have been expanding their reserves recently. 

BTC Mining Outlook

The outlook for Bitcoin mining economics in the coming months is uncertain but potentially promising if the hashrate continues to increase. The next Bitcoin halving is expected to take place in April 2024, slashing block reward by 50%. 

When the halving occurs, things could even get tighter for miners, as they would have to increase mine more blocks to break even. Nevertheless, big BTC mining companies are already on track for this adjustment. Marathon Digital, for example, was able to achieve a 54% boost in its hashrate during the second quarter but reported a net loss of $21.3 million.

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Lightning Speed: Accelerators And Incubators Focus Their Sights On Bitcoin

You know what incubators and accelerators mean: interest. They say that bear markets are for builders, and the bitcoin ecosystem seems to be getting ready to work. One of the main catalysts is the success of the Lightning Network. The little engine that could went from being constantly mocked to being a key element in the El Salvador story. Nowadays, the Lightning Network is the bitcoin ecosystem’s absolute star and one of the reasons money is pouring in.

The three accelerators and incubators that this article will consider couldn’t be more different from each other, but they share the bitcoin-only ethos. And an unhealthy interest in the Lightning Network. From a Jack Dorsey-funded initiative, to a corporate ultra-deluxe opportunity, to a bunch of technically minded individuals that opened their doors in the name of bitcoin. Pick your poison, there’s probably an accelerator for you here. 

The TBD Open-Source Incubation Program

The Jack Dorsey-funded organization that’s working in the decentralized bitcoin exchange TBDex can probably help your bitcoin project. They recently announced the TBD Open Source Incubation Program, but there’s not much practical info on it yet. “TBD Incubation projects are managed by community contributors. They advance the decentralized web and accelerate development and adoption of the Web5 platform,” the company wrote.

They did specify that the program was focused on Open-Source projects and said that TBD will “soon be announcing our first Incubation project!” The announcement also promised that “when projects reach maturity, they may apply to be promoted out of Incubation into a central project,” so the TBD program might turn into an accelerator over time.

BTCUSD price chart for 11/03/2022 - TradingView

BTC price chart for 11/03/2022 on Bitstamp | Source: BTC/USD on TradingView.com

The Wolf Startup Accelerators Focused Exclusively On Lightning

This is the corporate one. This is the deluxe one. It’s run by “Stone Ridge, owner of an alternatives asset manager that has raised more than $40B since inception and parent of bitcoin company NYDIG.” Among other things, they offer, “transportation to NYC and lodging for the duration of the 8-week program are included from anywhere in the world.” The program is exclusively focused on the Lightning Network.“Wolf accepts applications from individual founders and small teams at the pre-seed idea stage up through those ready for a Series A financing round.”

The investments are also deluxe, selected developers get a $250K guaranteed seed funding, so they can focus all of their attention on the project. Also, “at the end of each program, one team will be chosen by a panel of judges to receive an additional $500K in funding.” That, plus all the knowledge you and your team can collect in those eight weeks.

The Pleb Lab Co-Working/ Accelerators

In contrast, Pleb Lab is “a co-working / accelerator in Austin, Texas at the heart of the financial district. We support outstanding projects and teams in several ways.” They are bitcoin-only, with a focus on “the Lightning Network – an essential step towards decentralized finance.” Their other focus is free and open-source development, “the FOSS ethos is at the center of what we do here at Pleb Lab.”

What does the Pleb Lab accelerator do, exactly?

  • “Working directly with Bitcoin & Lightning startups”

  • “Granting workspace among other brilliant Bitcoin developers at Pleb Lab”

  • “Providing startup advisory and mentoring”

  • “Providing business development, marketing and strategy”

The Austin bitcoin scene is growing by the minute, and Pleb Lab is right there in the middle of it. Apparently, one of its best characteristics is to be in the same room with other bitcoin developers trying to solve similar problems to yours. As you might imagine, they all help each other. This one is not a competition and there are no obvious prizes.

Featured Image: Pleb Lab logo from their website | Charts by TradingView

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Bitcoin Shocker: Lightning Network Capacity Reaches 5,000 BTC

The Bitcoin Lightning Network has marked another tremendous milestone. The total public capacity had surpassed more than 5,000 BTC for the first time in history, continuing along with the growing trend of 2022. This new milestone pushes further the capability and promise of the Bitcoin Lightning network. Just like always, there was a reason behind the big push.

Bitcoin Development Ramping Up

The continuous development of the bitcoin network has been a big part of why the digital asset remains so valuable today. Being the largest decentralized network in the space, there are always developers looking for new ways to leverage the offerings of the bitcoin network and push it further into the mainstream.

Lightning Labs is a development firm that continues to focus heavily on bitcoin development and was behind the new all-time high Lightning network capacity. The developer had expanded the channel capacity of River Financial and Loop, allowing for the network to be able to accommodate even more BTC. It also follows the introduction of the new Taro Protocol, whose code was posted for public dissection last week as Lightning Labs continue to expand the capabilities of the bitcoin network.

Lightning network reaches new milestone | Source: Arcane Research

The Bitcoin Lightning network is also becoming increasingly popular among BTC users. MicroStrategy, which holds a large investment position in BTC, made the news when it posted a job offer seeking a full-time lightning network engineer. Apparently, the firm is looking to build a Lightning network-based SaaS platform for e-commerce and enterprise use cases.

Taro Protocol, mentioned above, is working towards making it possible for developers to mint, send, and receive new tokens on the bitcoin blockchain. Take the Ethereum ERC tokens as an example. It will also expand the possibilities of NFTs on the bitcoin blockchain, as well as allow for the creation of stablecoins that are based on the bitcoin blockchain. 

BTC price settles above $20,000 | Source: BTCUSD on TradingView.com

The Lightning Network is also increasingly featured in crypto payments services due to its speed. El Salvador had adopted the Lightning network to make it easier to pay with BTC in the country, and digital payment provider Strike raised $80 million in September to expand its Lightning network-based payment solutions for merchants.

Layer 2 solutions like the Lightning Network are also expected to be more important to the bitcoin network going forward. Cardano founder Charles Hoskison recently revealed that he expects the majority of BTC will likely exist outside the bitcoin network in the next five years and be wrapped in these Layer 2 solutions.

Featured image from Coindesk, charts from Arcane Research and TradingView.com

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Bitcoin Enters Hibernation Mode As Network Activity Lulls

Bitcoin has seen a tremendous slow down in network activity following the market crash in mi-June. This drawdown was expected as a reduction in network activity usually follows a rush to get out of the digital asset during the decline. This lull has brought various metrics back towards normal territories and daily miner revenues remain drowsy during this time.

Network Activity Slows

After the price of bitcoin had crashed to $17,600, there was a rush to get out of the digital asset. This had led to a tremendous surge in network activity. Average transaction volume had shot up from around $18,000 to $37,000 during the past week as volatility rocked the market. Mostly, these moves were triggered by fear that the price of the cryptocurrency would continue to decline.

Related Reading | Holding Back The Bears: Why Bitcoin Must Break $22,500

However, as the price of bitcoin has stabilized, the network activity has begun to return to normal levels. This is seen in the average transaction value for this week which has fallen by almost 50% to return to the $18,000 level. Additionally, on-chain activity has now dropped so low that it has now entered what is referred to as a hibernation mode. 

Transactions per day on the network have also declined with the stability returning back to the market. This number had been at 252,382 on average for the past week but now sits at 242,737 representing a -3.82% drop.

BTC price declines to $19,000 | Source: BTCUSD on TradingView.com

The same has been the case for the total daily transaction volumes. While investors had scrambled to exit their positions, daily transaction volumes had risen to more than $9 billion. However, with bitcoin stabilizing at around $20,000, this value has dropped to $4.4 billion, a 51.75% change from the prior week.

Bitcoin Miners Take Hits

Bitcoin miners have been one of the worse-hit when it comes to the changes that are happening in the market. An example is the daily miner revenues that are being recorded for the last couple of weeks.  It had declined significantly in the month of June, and there has been no recovery in sight.

The prior week had seen daily revenues touch $18.3 million per day, and with the last week, there has not been much change. A 2.02% rise meant that daily miner revenues rose to $18.69 million, while the percentage made up by fees dropped by 0.7%.

BTC hashrate declines | Source: Arcane Research

It is also shining through in the hashrate which has also taken a bit of a nosedive. After hitting a new all-time high earlier in the month, the decline has been apparent so far. It is a direct result of decreased profitability, affecting the block production rate.

Related Reading | Bitcoin Records Worst Performance For June, Will It Get Better From Here?

The number of blocks produced per hour last week came out to 5.85, and since hashrate is expected to remain depressed due to low profitability, there may not be much recovery in the block production either. This decline has also translated to lower ASIC prices.

Lastly, fees per day also dropped significantly during this time. After touching $437,159 in the prior week, a 28.59% drop saw fees per day for last week come out to $312,191.

Featured image from Finbold, charts from Arcane Research and TradingView.com

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New Bitcoin Users Activity Spikes To New All-Time Highs, What Does It Mean?

The new Bitcoin users graph is a sight to behold. Even though Bitcoin’s price was horizontal for a while there, the network kept growing. And, with each new participant, the network expands infinitely. And, with that, the value of the network increases in the same magnitude. Such is the nature of the “network effect” phenomenon. 

That is what this chart by on-chain analyst Will Clemente shows:

The number of new users coming on the Bitcoin network continues to reach new all time highs. pic.twitter.com/yttPlhJBPd

— Will Clemente (@WClementeIII) August 4, 2021

As one of the hosts from the Alt-Coin Daily show said, “The traders control the short-term market.” However, if we’re talking long-term, this is one of the most bullish charts you’re going to see. And, luckily for us, Clemente himself explained the chart’s nuances on said YouTube show. 

Related Reading | TA: Bitcoin Regains Strength, Why Bulls Eye Strong Rally above $40K

The Whales Are Distributing Their Coins

According to Investopedia, the Gini coefficient is:

The Gini index, or Gini coefficient, is a measure of the distribution of income across a population developed by the Italian statistician Corrado Gini in 1912. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population. 

Bitcoin’s Gini coefficient is getting healthier and healthier. According to William Clemente, when you filter out ETFs and Grayscale, on-chain analytics show that “over time whales are just distributing their coins.” According to him, entities with less than 10 BTC never stop buying. “Since May 19th, retail has been accumulating more heavily than the whales have.” Each day that passes, Bitcoin’s “healthy distribution of the network” gets better and better.

New Bitcoin Users, A Very Appealing-Looking Chart

According to Clemente, his “very appealing looking chart” shows “the net users growth of the network.” His methodology is simple. He looks for “clusters of addresses that look like one person,” those are the entities. Then, he subtracts “the amount of new entities coming on-chain” from “the entities that look like they’re dormant.” The result is the daily new Bitcoin users.

As the chart clearly shows, we recently achieved an all-time high in new Bitcoin users per day. However, there’s more. According to Clemente, the story is in the “incremental increase between each mayor peak.” At the peak of 2011, 1050 new users came into the network per day. In the two 2013 peaks, the number went from 1500 to about 5000 a day. In 2017’s best moment, Bitcoin was bringing in 40000 new Bitcoin users a day.

Related Reading | Bitcoin Set To Outperform In Second Half Of 2021, Bloomberg Analyst

All of those peaks had a dramatic drop back down. If we look at 2021, in general, it’s a “slow grind higher.” So, “If this is the peak, we haven’t seen this drop-off in new user growth that we had each cycle.” On the contrary, “we just crossed the all-time high of 2017.” If Clemente is right, those new Bitcoin users mean we’re nowhere near the top.

BTC price chart for 08/06/2021 on Bitstamp | Source: BTC/USD on TradingView.com
What Do The Greats Say About Bitcoin’s Users?

The legend states that once upon a time legendary investor Paul Tudor Jones asked Stan Druckenmiller:

“Do you know that when Bitcoin went from $17,000 to $3000 that 86% of the people that owned it at $17,000, never sold it?” Druckenmiller replied: Well, this was huge in my mind. So here’s something w/ a finite supply & 86% of the owners are religious zealots.

Will the new Bitcoin users act the same way when the season of the bear arrives? Only time will tell.

Featured Images by History in HD on Unsplash – Charts by TradingView