Lightning Network Grows To 1,700 Channels!

  • Bitcoin's future looks bright again with lightning
  • Professor Steve Hanke says something rash about bitcoin

Comment of the Day @brakmic

Lightning Network Grows

The future of Bitcoin is looking bright once again and it seems as though the enormous fees that we saw only weeks ago are starting to dissipate. The price taking a huge dive certainly helped reduce the $ cost of fees as well as reducing the trading volumes and general velocity of bitcoin. However SegWit has also helped to reduce fees and the first 'organic' 2MB block was mined recently. Even Coinbase has said they will be implementing SegWit shortly as well as batching transactions, all of which will put less stress on the network.

 

 

However, 'Satoshi's vision' and many early bitcoin adopters' vision was to provide cheap and fast transactions that would allow you to buy your cup of coffee and send $1 Billion. Unfortunately this vision had been lost as security and censorship resistance come at a cost but the much hyped and long awaited layer two scaling solution is here - lighting. 

The testnet launched late 2017 and I even had the pleasure of taking part as the 2657 node. I managed to pay for my 'Starblocks' coffee with fake bitcoin and the fee was less than a cent and the payment instant. It gave me a warm fuzzy feeling but I dared not hope that we could truly revive 'Satoshi's vision' from the grave. For one it was very buggy and not that easy to set up and secondly there are the issues with having to lock your money in a channel until you settle your balance, which means part of your wealth is trapped and if the other side of the channel doesn't pay up, your BTC stake can remain frozen for some time. 

Looking at the beautiful map of the 1,700 channels setup on the mainnet its exciting to imagine the potential retail adoption of Bitcoin with cheap and instant transactions. I dare to hope that Bitcoin will really be used as a common medium of exchange one day.

In the meantime, help get this lonely node a payment channel!

Steve Hanke On Crypto

Cryptocurrency seems to encourage a hasty and often stupid response from some of the world's most intelligent people. Professor Steve Hanke has joined the long list of these high profile remarks, behind Nobel laureate Joseph Stiglitz who said Bitcoin 'Ought to be outlawed' and Jamie Dimon who garnered the most publicity for calling bitcoin 'a fraud'. 

Professor Steve Hanke is an American applied economist at the Johns Hopkins University in Baltimore and he recently tweeted:

Its clear that the anonymity of cryptocurrencies scares some people and governments but as many were quite to respond it kind of the point... Seeing as bitcoin emerged from the 'Cypherpunk' group  who were activists advocating widespread use of strong cryptography and privacy-enhancing technologies as a route to social and political change.

Regardless of whether Bitcoin and cryptocurrencies succeed they are without doubt one of the most disruptive innovations as they allow wealth to be stored outside of the control of governments for the first time since fiat money was invented. It is also the first form of money thats supply is controlled by math. Unlike fiat supply which is controlled by centralized groups of power who enjoy the freshly minted currency before generously 'spreading the wealth' to everyone. This debases the currency by the time it reaches the average citizen and their dollar is worth less than the same dollar printed, this is called inflation.

Hopefully as time passes the great thinkers of our time will take a bit more consideration when weighing up the good and bad of cryptocurrenices to elevate the debate from - is it a Fraud, Yes of No? 

Upcoming Bitcoin Halving Event Could Drive BTC Price Even Higher, Analyst Explains

Vijay Boyapati, a widely-followed Bitcoin (BTC) analyst, recently published a detailed Twitter thread regarding the potential impact of bitcoin’s block reward halving event - which is now less than a year away.

In a series of tweets, Boyapati explained how the BTC halving event “interacts” with the pseudonymous cryptocurrency’s “recurrent hype cycles.” The former software engineer at Google questioned whether crypto bull markets may be attributed to bitcoin’s hype cycles, while also noting what was learned from previous BTC mining rewards halvenings.

“Constant Downward Pressure” on BTC Price Exerted When Miners Sell

According to Boyapati, crypto miners are essentially running “marginal” businesses as most of them sell the bitcoins they mine to cover operational costs. The Bitcoin protocol releases new bitcoins at approximate time intervals of (every) 10 minutes.

When miners sell their bitcoins, the crypto’s price is affected by “a constant downward pressure”, Boyapati noted. He added that “without new money” entering the digital asset market, BTC’s price would begin falling sharply. According to his estimates:

At a BTC price of $10,000 approximately $14 million dollars must enter Bitcoin to offset the downward selling pressure.

He continued: ”During the [cryptocurrency] bull market, demand far outstrips miner sell pressure, but eventually the cycle ends and miner sell pressure is amplified by investor's fear selling.”

Once the selling pressure has been “exhausted”, the market cycle “reaches capitulation”, Boyapti argued. He also mentioned that the downward pressure, which results from miners selling, is then “equipoised” with the upward pressure imposed by bitcoin investors who refuse to sell. This group of bitcoin holders (or “HODLers”) think of BTC as a legitimate store-of-value (SoV). Due to these types of market activities, the bitcoin price reaches a “steady plateau”, Boyapti stated.

Hype Cycles “Only Create a Temporary Equilibrium”

He further noted that the “price plateau of the classic Gartner hype” (excitement and investor enthusiasm created due to new technological developments like bitcoin) is “only a temporary equilibrium.”

Boyapati also pointed out:

While supply and demand are evenly balanced during the plateau, the Bitcoin halving disrupts the equilibrium by halving the sell pressure.

After a BTC halving event, which effectively reduces the daily supply of newly minted bitcoins by half their previous rate, Boyapti believes:

The equilibrium demand of HODLers now exceeds miner sell supply, tending to move Bitcoin's price upward.

He explained that the upward BTC price movements eventually begin to “feed” on themselves and usually result in the “next” crypto market bull run. It’s also at this time that new investors enter the digital asset ecosystem, Boyapati noted.

Does Crypto Market “Discount Halvings A Year In Advance?”

The former application developer believes that financial markets “do not mechanically react to known future events.” Moreover, he emphasized that bitcoin halving “occurs on a predictable schedule.”

He went on to claim that markets “anticipate” important future events and that it seems, from past experience, that the “market discounts halvings about a year in advance.”

Boyapti also pointed out:

[Historically,] the Bitcoin market begins its upward ascent about a year before the halving, and about a year after the halving goes parabolic. But markets anticipate, so this [may] happen faster this time...It appears...Bitcoin halving is a key fundamental driver of Bitcoin’s monetization.