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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

Controversial Bitcoin Contract Leads To Heated Debate: Could It Kill The Cryptocurrency?

Tony "The Bull" Severino
Tony "The Bull" Severino
5 years ago
2 mins read
bitcoin kill crypto contract death

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Because of Bitcoin‘s speculative nature, the asset potentially reaching prices of $1 million per BTC is just as feasible as the cryptocurrency falling to zero.

And while Bitcoin has shown resiliency in the past against all odds, a new controversial contract has lead to a heated debate on if it could lead to the untimely death of the first-ever cryptocurrency.

Is the Bitcoin Killer Finally Here?

United States politicians have come out and explicitly said, there’s effectively no way to kill Bitcoin. The decentralized nature of the asset means it exists outside of the control of third-parties.

Hundreds of obituaries have been written about the first-ever cryptocurrency, and from the ashes it regularly rises again.

Related Reading | Crypto Altcoins Risk Dangerous Collapse As Three Year Triangle Resolves

Bear markets haven’t been able to kill it. Chinese miners that may have the motivation to kill it haven’t been able to do so, either. Not even the Black Thursday crash caused by the coronavirus outbreak could put the crypto asset to its death.

But a new “leveraged, fiat-settled” contract focusing on Bitcoin hashrate futures, could be the first thing that actually has a chance to kill Bitcoin.

Leveraged fiat-settled hashrate futures, like offered by @FTX_Official, could kill #Bitcoin.

If a big enough miner can pull their hashrate enough to make a leveraged short more guaranteed-profitable than mining, and miners are indiscriminately profit-oriented…

— notsofast (@notsofast) May 20, 2020

It’s led to a heated debate across the cryptocurrency community.

Does This Controversial New Contract Have Potential To Destroy Crypto?

A new type of futures contract that allows traders to make bets on Bitcoin‘s hashrate from the rapidly growing derivatives platform FTX, has been said to have the potential to send the cryptocurrency to its doom.

Because rising or dropping hashrates can lead to profits depending on which side of the bet the trader has made, it could potentially influence miners to pull their hashrate to make a leveraged short on the hashrate that much more profitable.

Related Reading | Who Is Satoshi? Rounding Up The Usual Suspects After Today’s 50 Bitcoin Transaction 

For example, a short position on this contract from a large enough miner who pulls their hashrate would immediately profit from the hashrate drop. It could incentivize large enough miners to let greed convince them to destroy the cryptocurrency for profit.

Crypto enthusiasts are calling it a “serious vulnerability.”

The derivatives platform’s CEO who is an active member of the crypto community chimed in on the debate to clarify the economic feasibility of such a thing.

If you have 1% of hashrate, and decide to throw it away for 3 months, you're losing about $7m. If you wanted to *break even* on a futures hedge you'd need a position of size *$700m* without having any impact. It's not economical.

— SBF (@SBF_FTX) May 21, 2020

He claims that someone who controls just 1% of the hashrate would lose $7 million over three months if they shut down their machines to try and influence their positions.  Just to “break even” on a futures hedge it would require a position size of roughly $700 million. Therefore, influencing the contract is simply “not economical.”

While this likely isn’t the dangerous situation for the cryptocurrency that the community first feared, it does expose a potential vulnerability in Bitcoin that may not have been thought of before.

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Tony "The Bull" Severino
Tony "The Bull" Severino

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Read more

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

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