Cryptonomy

Cryptonomy

What is the Bitcoin halving?

The Bitcoin halving controls Bitcoin's inflation and value by cutting miners' rewards every 210,000 blocks, which affects the supply of new bitcoins.

What is the Bitcoin halving?

Elliott Wave Theory: What it is and how to read the waves

Elliott Wave is a technical analysis method that interprets price movements as repeating wave patterns tied to investor psychology. Its basic picture is a five-wave move in the direction of the main trend followed by a three-wave correction, though this is no guarantee of a forecast.What Elliott Wave Theory isRalph Nelson Elliott, an American accountant, developed his theory in the 1930s by studying stock market charts. He argued that the collective behavior of investors creates repeating structures in prices, as optimism alternates with fear.Think of a rising market: some people buy early, others have doubts, and later enthusiasm takes over. The theory tries to organize these swings into waves. However, it doesn’t measure sentiment directly, nor does it prove that every fluctuation has a specific psychological cause.The name Elliott Wave Theory describes this approach. You’ll also see it called Elliott Waves, while the spelling “Elliot” with a single final t is common but doesn’t match its creator’s surname.How waves 1–5 and A–B–C workThe basic pattern consists of a five-wave motive move and a corrective phase, often of three waves. In an uptrend example, waves 1, 3 and 5 move up, while waves 2 and 4 pull back, retracing part of the previous move.The motive phaseWave 1 starts the move and wave 2 pulls back against it, without wiping out its starting point. Wave 3 continues in the main direction, wave 4 brings a new correction and wave 5 completes the five-wave structure.Note the difference: not all five waves go up. Also, a motive structure can point down when the main trend is bearish. The numbers describe the position within the pattern, not necessarily a rise.The corrective phaseAfter the five-wave move, the simplest example of a correction is labeled A–B–C. In a bull market, A pulls back, B rebounds and C pulls back again.The real picture isn’t always that neat. There are zigzags, flats, triangles and combinations of them. So A–B–C is a starting point for understanding, not a template for every chart.The basic rules of an impulse waveThe most common five-wave motive structure is called an impulse wave. For such a count to hold up, it must follow some basic rules:Wave 2 may not retrace all of wave 1 by moving back past its starting point.Wave 3 cannot be the shortest in price length among waves 1, 3 and 5.Wave 4 must not enter the price territory of wave 1.The last rule applies to the standard impulse. Diagonals have different characteristics and allow overlap. But it isn’t enough to label every problematic pattern a “diagonal” just to save our original call.A rule is one thing; typical behavior is another. For example, wave 3 often shows strong momentum, but it isn’t necessarily the longest. Likewise, the alternation between a sharp and a sideways correction in waves 2 and 4 is a guideline, not an unbreakable law.Why the count changes with the timeframeOne wave on a daily chart can contain a whole sequence of smaller waves on an hourly chart. This appearance of similar structures at different scales is called a fractal structure.Picture a map: from far away you see one main road, while zooming in reveals its bends. In the same way, a small pullback may be a correction within an uptrend, while that same uptrend may be part of a larger downtrend.That’s why the timeframe should be stated up front. Constantly switching charts until the desired pattern shows up makes the analysis harder to test.Elliott Wave and FibonacciAnalysts often combine Elliott waves with Fibonacci ratios. Fibonacci retracements measure how much of a previous move the price has given back, while Fibonacci extensions project possible proportional lengths for a following move.In practice, the ratios are used to check whether a correction or a motive move fits the hypothetical scenario. They don’t dictate where the market will stop, and on their own they don’t confirm the count.The choice of start and end points changes the measurements. If we keep moving the points so that the lines line up with the price, we are fitting the explanation to the outcome instead of testing a hypothesis.How to apply it to a chart in practiceWe believe the method is most useful for organizing alternative scenarios. A consistent reading process can follow these steps:Pick a timeframe and look at the bigger trend before focusing on the small moves.Identify the obvious highs and lows, without numbering every small fluctuation.Draw a possible count and check whether it breaks the rules of that particular structure.Write down which development would invalidate it and what alternative interpretation exists.Compare the picture with the trend, trading volume and other independent indicators.For example, if a pullback has been labeled wave 2 of a bullish structure and then drops below the start of wave 1, that count is rejected. We don’t just fix the numbering after the fact without admitting that the original hypothesis failed.What’s different with cryptoThe theory is also applied to charts of Bitcoin and other cryptocurrencies, but round-the-clock trading and sharp swings make them harder to read. A news event, thin liquidity or forced liquidations can change the picture quickly.There is also a practical detail for readers in Greece: the same cryptocurrency can show different highs against the euro and against a stablecoin. You need to be consistent about the trading pair, the data source and the timeframe.Also, a wave count doesn’t assess a protocol’s security, the quality of its team or the sustainability of a token. The technical picture doesn’t replace research into the project itself.The pitfalls and our takeThe biggest obstacle is subjectivity: two analysts can count the same chart differently. The more complex structures are brought in, the easier it becomes to find an explanation after the fact for almost any move.There is also the trap of confirmation bias. When we expect a rise, we may see a wave 3 “coming” everywhere and ignore the evidence that disagrees. The chart doesn’t owe it to us to prove our count right.The Cryptonomy team sees Elliott Wave as a useful framework for observation, not a machine for certain predictions. We think it offers more when it comes with clear invalidation rules and an honest assessment of failed scenarios. The approach above is educational and is not a trading recommendation.Frequently asked questionsWhat does Elliott Wave mean?It refers to Elliott Wave Theory. It is a technical analysis approach that looks for repeating structures in prices and links them to the collective psychology of investors.What are the five Elliott waves?In the standard motive structure, waves 1, 3 and 5 follow the main direction, while waves 2 and 4 move against it. The main direction can be up or down.Is wave 3 always the longest?No. In a standard impulse it may not be the shortest of waves 1, 3 and 5, but that doesn’t mean it always has to be the longest.Can Elliott Wave predict the price of Bitcoin?It can be used to frame scenarios, not to make certain predictions. The count is interpretive, and a price move can invalidate the original scenario.Do you need Fibonacci for the count?No. Fibonacci ratios are complementary, helping you compare moves. They don’t replace the wave rules, nor do they prove that a count is correct.

Elliott Wave Theory: What it is and how to read the waves

KAS: What is Kaspa?

The idea behind Kaspa (KAS) is to build a Nakamoto-style system that runs faster, limited only by the speed of the internet.

KAS: What is Kaspa?

What is Bitcoin and how does it work in practice?

Bitcoin is digital money that can be sent over the internet without a bank having to approve the transaction. It runs on a decentralized network of computers, which checks and records transactions in a public ledger, the blockchain. Its currency is denoted BTC and is not issued by any central bank.What is Bitcoin and who created it?Bitcoin went live in 2009, after Satoshi Nakamoto published its technical description. The name is a pseudonym, and the real identity of the creator, or group of creators, remains unknown.The original idea was a peer-to-peer electronic payment system. In other words, two people should be able to transfer value without relying on a central administrator that keeps the books and decides which payments are allowed.The word Bitcoin usually describes both the network and its currency. “Bitcoins” are not a different product. They are the units of value transferred within this system.BTC and satoshisYou don’t need to own a whole bitcoin. Each BTC is divisible into 100 million satoshis, so a transfer can involve a very small fraction of one.The protocol’s current rules set a maximum supply of 21 million BTC. This doesn’t mean they have all been created already, nor that the limited supply guarantees a rising price.What does it mean that it is decentralized?At a bank, your balance exists in a system managed by that institution. In Bitcoin, many independent computers keep copies of the history and check that the same rules are followed.The code is publicly available, and anyone with the right equipment and connection can run a node. There is no central switch that controls the whole network.That doesn’t mean all participants have the same role or the same influence. Large mining pools, exchanges and service providers can create concentrations of power, but they don’t automatically gain the right to change the rules for everyone.How Bitcoin and the blockchain workThink of a shared ledger, copies of which are kept by people in different parts of the world. The difference from a shared document is fundamental: no one can simply open the history and change whatever they want.The blockchain organizes transactions into groups, called blocks, that are cryptographically linked to each other. As a result, a change to older data is detectable, and reversing confirmed history requires computational work.Who checks the transactions?Full nodes independently check transactions and blocks against Bitcoin’s rules. Among other things, they check that there is a valid digital signature and that the coins being spent haven’t already been used.This solves the problem of double spending: the attempt to pay two different recipients with the same digital money. No vote of all users is needed for every payment; the nodes apply common rules and reject anything that breaks them.Confirmations and waiting timeWhen a transaction is included in a block, it gets its first confirmation. Each subsequent block built on top of it adds another, usually making it harder to reverse.The network targets a new block roughly every ten minutes on average, not exactly every ten minutes. How long a payment takes also depends on congestion and on the fee the sender offers.What is Bitcoin mining?Mining is the process by which new blocks are proposed and new BTC is issued according to the protocol. Miners compete using specialized machines known as ASICs.They don’t solve useful mathematical equations, as is often claimed. They perform repeated hashing computations, looking for a result that meets the network’s difficulty target. This is the proof of work mechanism.The miner who finds a valid block can receive the set reward of new BTC and the fees of the transactions in it. The issuance of new coins is cut periodically by halving the block reward, known as the halving. Nodes still reject a block that breaks the rules, even if it was produced with expensive equipment.Mining requires electricity, cooling and capital. For someone in Greece, the cost of electricity is a critical factor, and an ordinary computer is not practically competitive Bitcoin mining equipment. Profitability is not a given.How a Bitcoin wallet worksA digital wallet doesn’t store coins the way a wallet holds banknotes. It manages the private keys that allow you to sign transactions and prove your right to spend.A Bitcoin address can be shared to receive payments. The private key, by contrast, must stay secret. Many wallets provide a seed phrase (recovery phrase) that can restore access; anyone who gets hold of it can also take control of the funds.With self-custody, you control the keys and take on the job of protecting them. When BTC is held on an exchange, the keys are usually controlled by the company. It is more convenient, but it adds provider risk.A transaction in practiceThe recipient gives the sender an address or a QR code.The sender checks the address, network, amount and fee.The wallet signs the transaction and broadcasts it to the network.The transaction is checked and waits to be included in a block.The recipient waits for the number of confirmations they consider appropriate for that payment.There is no central customer service that can cancel a confirmed transfer to the wrong address. That’s why checking before you send really matters.Where is it used and where does its value come from?Bitcoin is used to transfer value, for international payments and, by some holders, as a long-term asset. However, it isn’t accepted in every store, and the base chain doesn’t always offer cheap micropayments. The Lightning Network, a layer 2 network, aims for faster and cheaper payments, with additional technical requirements.Its price in euros is set by supply and demand in the markets. Limited issuance, transferability and trust in how the network works all contribute to demand, but there is no guaranteed value or return.The comparison with gold is mainly about scarcity, not any guarantee of stability. Think of a coffee priced in euros: if it is paid for in BTC, the merchant takes on exchange-rate risk until they convert it.The risks and what applies to users in GreecePrice volatility can lead to large losses. There are also scams, stolen seed phrases, malicious apps and the risk of exchanges going insolvent. The security of the network does not guarantee the security of every service that uses the Bitcoin name.Bitcoin is pseudonymous, not fully anonymous. Transactions are public, and addresses can be linked to identities, especially through services that verify their customers’ identity.For users in Greece, the EU’s MiCA regulation sets rules for crypto-asset service providers. It doesn’t turn BTC into a bank deposit, nor does it eliminate the risk of loss. Tax treatment needs to be checked against the current guidance of AADE (Greece’s Independent Authority for Public Revenue) and each taxpayer’s circumstances; keeping a record of your transactions and receipts helps you document your position.Our viewAt Cryptonomy, we believe Bitcoin’s real innovation is transferring digital value under public rules, without a single administrator. That is technologically interesting regardless of the day-to-day price moves.But we don’t overlook its energy consumption, its limitations for payments or the responsibility of custody. Decentralization gives you more autonomy, but it doesn’t come with a safety net. In any case, we keep understanding the technology separate from expecting a profit.Frequently asked questionsWhat is Bitcoin, in a nutshell?It is a digital currency and payment network with no central bank. Transactions are checked by computers that follow common rules and are recorded on the blockchain.Do I need to buy a whole bitcoin?No. One BTC is divisible into 100 million satoshis, so you can hold or transfer a fraction of one.Is Bitcoin anonymous?Not fully. Addresses don’t necessarily show a name, but the transaction history is public and can be linked to individuals.Can I lose my bitcoin?Yes. Losing your keys without a backup, theft, a mistaken transfer or a provider’s collapse can all lead to losing access or funds.How much does a Bitcoin transfer cost?The fee on the base chain depends mainly on how much space the transaction takes up and on the demand for block space, not simply on the amount. An exchange may charge a separate withdrawal fee.

What is Bitcoin and how does it work in practice?