Stellar briefly gained fourth position today with a market cap of $3.515 billion, just slightly above BCH’s $3.507 billion.
The flip didn’t last, but trading volumes in Bitcoin Cash (BCH) have plunged to less than $100 million. By comparison eth’s trading volumes have increased to above $2 billion while bitcoin is currently at $5 billion.
The reason for this considerable reduction in BCH trading is probably due to a number of exchanges still not allowing deposits or withdrawals after a chain-split fork on November 15th.
Those that have opened them require significant confirmations of 20 blocks or more, meaning one has to wait for hours.
That presumably has placed on hold some BCH activity, with its price now falling by 2/3rds to $200 from $600 prior to the split.
Stellar too has fallen considerably, with its brief gain of fourth position being more due to falling less, rather than any bullishness.
The coin is sort of a clone of Ripple (XRP) which has maintained second position for the longest time since ethereum gained it in 2016 or thereabout.
The reason is perhaps because Ripple and Stellar do not use Proof of Work (PoW). The market, therefore, punished them less following threats of 51% attacks which never materialized.
Unlike Ethereum’s plans for staking – as in using eth itself to identify a node as real rather than faked – Ripple and Stellar use a different sort of consensus mechanism.
The details can be complex, but basically you just choose 20 nodes you trust and you let them get on with it. As long as 80% are honest, meaning there is an attack vector of 20%, then all is fine.
Due to that trust requirement, Ripple Labs sort of gives permission to what node can validate, or as they would say, they manage a recommended nodes list.
Stellar sort of does away with that nodes list and kind of opens the network to everyone. You still need to choose say 20 nodes, and you still need to trust them, but they claim a people’s vote of sorts in choosing trusted nodes would create many overlapping networks of 20 nodes that makes changing history difficult.
The obvious attack vector here is putting up millions of such nodes and you voting for your own nodes to effectively break the consensus, or to change history as you please.
Why one can’t do so isn’t easy to establish, but there are suggestions that older nodes have more say over the rules, so your deception attack might need some time and careful planning.
There’s obviously no real incentive to engage in it, so we haven’t seen any such attack – as far as they have self-disclosed because it is doubtful many devs are paying any attention to either XRP or XLM to command line run a validating node – or attempt so anyway.
That might partly be because neither has smart contracts and neither is very open or accessible for devs. XRP has no tokenization capabilities at all as far as we are aware, while Stellar does in the same style as bitcoin’s colored coins.
That might be because both were created before ethereum invented smart contracts and the concept of the world computer. Ethereum’s inflation is however currently very high at 7%, so it isn’t faring very well.
That inflation will be reduced to about 4% in January, but eth’s inflation rate was even higher in 2016 and for much of 2017. So this might be the market seemingly re-adjusting its view on PoW.
Proof of Work, however, has worked for a decade. So rather than a fundamental analysis, this might be more a temporary trend chasing by traders in light of the subjectively ridiculous – but technically irrelevant at a network level – chain-split in BCH.