Cryptocurrency Market Down 54% in Q1 2018, Losses Top $500 Billion

Pratik Makadiya
  • In the first quarter, most major cryptocurrencies took a beating as the market lost over $500 billion
  • Bitcoin, the flagship cryptocurrency, is only now starting to recover

Cryptocurrencies had a rough first quarter with several governments throughout the world cracking down on crypto related businesses. According to Coinmarketcap data, that does not include data from South Korean exchanges, at the start of the year the overall cryptocurrency market cap was around $611 billion. By the end of the quarter, $342 billion was wiped off the market, a 56 percent drop.

On January 7, 2018, the total market capitalization skyrocketed to a peak $831 billion, but lost $315 billion by the end of the month.   

Crypto Market Cap And Bitcoin’s Performance

In the first quarter (Q1), most major digital currencies took a beating. The world's largest cryptocurrency, , lost half its value in Q1. Nevertheless, bitcoin still did better than most altcoins. The only positive for bitcoin in the first quarter was an increase in its dominance from 38.676% to 45.5%.

At the start of the year, bitcoin was valued at $14,268 against the US Dollar. Soon after, the cryptocurrency witnessed a price surge of 23 percent, which saw its value rise to $17,568. Since then bitcoin kept losing its value and never returned to the $17,000 mark.  Q1's lowest point for bitcoin value was on February 6, 2018, when its price was of $6,048. At present, the bitcoin price is fluctuating around $7,400.

Altcoins Lost Ground To BTC In Q1

Most of the top altcoins prices have dipped in the Q1. At the start of the year, Ripple was the second biggest cryptocurrency by trading volume, followed by . On January 1, 2018, dominance in the market was 14.29% whereas Ethereum dominated only 12.18%. On January 4, Ripple's price surged to $3.84 against the dollar, raising its dominance to 19% in the market. On January 8 both Ripple and Ethereum leveled with about 14% dominance over the crypto market and soon Ethereum took the spot as the second largest cryptocurrency by trading volume.

The highest point of Ethereum’s market cap was on February 1, when its dominance marked at 22.53%. At the start of Q1, Ethereum’s market volume was $73 billion and by the end, it's dropped to around $38 billion, a drop of over 48%. Whereas Ripple’s market cap experienced a drop of almost 78%, reducing from about $89 billion to $20 billion.  

In the first quarter of 2018, the entire crypto market suffered badly. However, bitcoin’s price may not have seen a surge but its dominance in the market have increased gradually. As for altcoins most of them had a bloody quarter losing ground to bitcoin.

SharkPool to Mine Empty Blocks on Bitcoin Cash ABC as 'Only One Chain Can Exist'

Francisco Memoria

The cryptocurrency mining pool “SharkPool” has recently revealed that if Bitcoin Cash ABC, the bitcoin cash chain that appears to be supported by most businesses in the space, survives the ongoing hashwar, it will mine empty blocks on it.

As CryptoGlobe recently covered, SharkPool is a cryptocurrency mining pool operated by Bitcoin Cash startup CashPay Solutions that has backed the Satoshi’s Vision (SV) side of the recent Bitcoin Cash hard fork. Bitcoin Cash SV was notably also backed by CoinGeek, and self-proclaimed Satoshi Nakamoto Craig Wright.

The pool has, via Twitter, revealed it’s set to “exclusively” mine empty blocks on altcoins and sell its profits for Bitcoin Cash.

SharkPool has revealed it sees “all alts, including forks and splits” as “acts of war against Bitcoin” that it claims will be treated as such. Recently, it revealed it will soon start mining empty blocks on altcoins that use the “bitcoin” name, including Bitcoin Diamond (BCD), Bitcoin Gold (BTG), Bitcoin Private (BTCP), and Bitcoin Interest (BCI).

The attack’s warning claimed the “sharks want to sharpen their teeth” and called these altcoins “appetizers,” which implied it was looking to attack bigger blockchains. In a conducted Twitter poll, the microblogging website’s users pointed to Litecoin as its first potential target.

CryptoGlobe caught up with Ari Kuqi, the co-founder of CashPay Solutions, to better understand what’s going on, and what can be expected in the future. From what we were told, one of the abovementioned altcoins using the “bitcoin” name can expect an attack “within 24 hours.”

When asked if the mining pool plans on attacking Bitcoin Cash ABC, Ari replied:

If ABC survives the hashwar mid-term, yes, we will mine empty blocks on ABC and force them into permissioned mining or using a spreadsheet. You should do some research on SolidCoin, they also used checkpoints to defend.

SolidCoin notably appears to be a cryptocurrency that fell to 51% attacks. Its developers attempted to stop them using checkpoints, but ended up failing. These checkpoints – which Bitcoin Cash ABC recently added – are supposed to help protect the blockchain against “block reorganization attacks”  where a separate chain is mined with greater hashpower.

Mining Empty Blocks

SharkPool’s strategy mining empty blocks on altcoins – a move that some can view as an attack – can essentially lead to the end of all economic activity on their blockchains. This, as mining empty blocks stops transactions from being processed, meaning that over a long period of time the blockchain would develop a large transaction backlog.

Moreover, SharkPool plans on selling the block rewards it gets from those empty blocks for BCH. This would both increase demand for bitcoin cash, but would also put selling pressure on the altcoins, potentially driving down their price.

The move, according to Ari, isn’t an attack, but part of the cryptocurrency’s governance model:

It’s Nakamoto Consensus. Nothing our miners or our pool does is illegal, we obey all laws and regulations. People have to understand that the governance model of crypto is Nakamoto Consensus, this is part of it. Miners execute their executive power by voting with their hash, building on a block or orphaning it. SharkPool is a sign of Nakamoto Consensus working cross-chains, building full blocks on bitcoin and preventing economic activity in altcoins.

The potential for it to mine empty blocks on altcoins and Bitcoin Cash ABC is, however, real. Per Ari, SharkPool has already had “over 500 sign ups.” While the pool decided “it would be more fun” to initially attack smaller altcoins, it revealed “Litecoin will be the first big one.”

The pool’s operator further claimed that by the next halving of block rewards – expected by March 2020 -  gigabytes's worth of transactions would  be needed for miners to be profitable. To have such a large amount of transactions, Ari added, “only one chain can exist.” Per his words, this is clear when reading Satoshi Nakamoto’s Bitcoin whitepaper.

The hash war between Bitcoin Cash ABC and Bitcoin Cash SV, he revealed, isn’t yet over. To him, cryptocurrency exchanges like Kraken and Bittrex who are giving Bitcoin Cash ABC the BCH ticker are being premature and possibly endangering users’ funds.

Bitcoin (BTC) and Satoshi Nakamoto

Bitcoin Cash SV [Satoshi’s Vision] is notably backed by Craig Wright, an Australian entrepreneur who claims to be Satoshi Nakamoto. We asked whether SharkPool believes he is indeed the flagship cryptocurrency’s creator, and what were his thoughts on BTC in its current state.

As for Wright, he revealed it doesn’t matter as “SharkPool fights for sound and stable money. nChain and CoinGeek are the only miners with their own skin in the game who want absolutely 0 change to the protocol.” As long as they support “sound money and Bitcoin as per [the] whitepaper,” he added, they’ll have SharkPool’s support.

As for Bitcoin, Ari Kuqi stated:

Restricting blocksize [to 1 MB], adding RBF [Replace-by-fee] and SegWit [Segregated Witness] have changed the economic incentives of BTC. Bitcoin is most importantly an economic incentives system, changing that, make BTC no longer Bitcoin.

Bitcoin Cash SV, currently trading at about $100 after falling nearly 15% in the last 24-hour period, supports an upgrade to the cryptocurrency’s block size to 128 MB. While the threat of mining empty blocks on Bitcoin Cash ABC’s chain is still there, Coin.Dance data shows it has accumulated more proof-of-work (PoW) than the BCHSV chain.