Another 10th Anniversary Read
For those who READ of course.
Not just the title but the contents as well.
(Op-ed) Bitcoin: 10 Years Of Survival Mode
First, let me congratulate all Bitcoin holders. Your currency of choice to store value has been “alive” (as a whitepaper), for the past 10 years.
And what a crazy ride it has been. It went from 0 to about USD 6200, which represents a 6200% valuation, with the usual ongoing ups and downs. However, for the past month, Bitcoin and other cryptocurrencies have been quite more stable than traditional markets, which came as a surprise to many naysayers and no-coiners.
Despite that, crypto still remains the most speculative asset to existence; something that I personally love, as it’s the easiest way to make some money on the long-term, however, much patience is needed to overcome the hardships of so much volatility.
In celebration of the past 10 years, I would like to do an overview of the market, in terms of transaction data, as well as, to remember the many events Bitcoin survived during this 10 year period.
Disclaimer: this article shouldn’t be taken as financial advisement; it represents my personal opinion and should not be attributed to CCN. I have savings invested in cryptocurrency so take whatever I write with a grain of salt. Do not invest what you cannot afford to lose and always read as much as possible about a project before investing.
One of the most important aspect (if not the most) of Bitcoin’s acceptance is the security and speed of its blockchain.
My goal is to look into a couple of technical data charts, such as transactions rate, mempool transaction count, difficulty adjustment, number of wallet users, hashrate distribution and the classic price analysis, as means of understanding the network’s evolution. Figures have been taken from TA expert Mati Greenspan’s daily analysis on hacked and from blockchain.info
At the time of writing, the Bitcoin network has been steadily increasing the number of transactions. On the last day of October, almost 3 transactions per second were being processed.
Interestingly enough, most blocksize is already being used as on average 90% of blocks are full; this is, there’s about 1mb in transactions size already. Some solutions like segwit or P2P Payment channels like the Lightning Network and Liquid, as well as, alternative side-chains, have all been proposed as means to scale the network’s 1mb blocksize limit, without necessarily needing to increase the actual blocksize.
Other projects, like Litecoin or BitcoinCash, have successfully forked the network into alternative currencies for faster and cheaper payments, by altering parameters like blocksize or consensus mechanics.
Which one will win?
Hopefully, the next 10 years will help us figure that out.
Looking now into the mempool, we can clearly see the number of transactions waiting to be confirmed have been steadily declining throughout 2018. Of course there is an obvious correlation between the number of unconfirmed transactions and the price of Bitcoin, as when we see sudden spikes in demand like the ones in late 2016 and 2017, price exponentially rises, transactions get expensive to process and there is a sudden lag in the number of approved transactions, as miners cannot cope with the amount of network requests.
Of course, this also correlates to the below graph, which shows the number of Bitcoin wallet users (according to blockchain.info) has been continuously growing. By using a logarithmic scale, we can quickly see the next threshold target to be around 100,000,000 user wallets.
What a great bullish signal.
To complement the previous analysis we should look into the average blocksize and the difficulty adjustment algorithm, which dictates how hard it is for miners to find the block hash, in order to validate blocks and get the associated Bitcoin reward.
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