Once again, the "death spiral" of bitcoin
Material posted: Publication date: 11-12-2018
Over the past month appeared in many publications, the authors wrote that bitcoin enters a phase of so-called "death spiral", Todes. Naturally, investors are very concerned about the development, primarily, in the short term price trend leading cryptocurrency.

However, according to experts on cybersecurity, cryptocurrencies researcher, writer and publicist Andreas Antonopoulos, bitcoin will hardly enter a phase of "death spiral".

The network of bitcoin miners find a block full of transactions every ten minutes. After 2016, the network automatically adjusts the mining process, when Hasrat network decreases, miners are able mine bitcoin with less difficulty; when he increases the level of difficulty of mining is increased accordingly.

"Death spiral", in the case of bitcoin, it implies a situation when miners are unable to cope with the difficulties of hashing, since the hash power is rapidly decreasing – this is due to the fact that miners are leaving the ecosystem due to the reduction in profits.

Antonopoulos explains:

"Some people assume that, if [a downward spiral] will come, many miners will say, "I no longer get adequate profit, because Herat fell by 50%, so intends to suspend the mining process". As a result, the mining process will slow down, which will lead to further fall in the value of asset prices, a further reduction of speed, etc. This is the death spiral".

However, the above scenario is hardly materializes on the bitcoin Protocol, because the miners working in this ecosystem, followed by a long-term strategy. Most of the major centers of mining have the ability to consume electricity and use the equipment for years; in meeting their needs on a weekly basis, the miners do not depend on system operators of power systems, especially in countries such as China, where, because of cheap electricity and cold climate, the centres of mining buy large amounts of electricity for their production needs.

Thus, miners are focused on long-term or medium-term results and profits, not short-term. And if Hasrat bitcoin is falling, and, as a result of decrease prices, mining becomes less profitable, the miners are likely to continue to work, as long as the asset value does not recover and starts mining again to make a profit. Antonopoulos says:

"One of the reasons why the death spiral is unlikely, is that the miners are aiming for the future: they have invested in the equipment funds and bought a large amount of electricity: they don't buy it every week. So if they have to, within, say, three months to wait for a return to the previous level of profitability, they retain the equipment and continue the work."

The death spiral can happen on a network, the public blockchain, and such a fate really befell in the past a number of minor cryptocurrencies. But in the case of bitcoin, given the size of its hash capacity, such is unlikely.

Over the past two months, Hasrat of bitcoin has declined from 50 to 37 exegeses of exegeses. However, from January 2018, Hasrat network blockchain has increased from 12 to 37 exegeses of exegeses, and on an annual basis the hash power of the network has grown more than three times.

Source: https://coinspot.io/technology/bitcoin/eshhyo-raz-o-smertelnoj-spirali-bitcoina-mnenie-eksperta/

Tags: Russia , information Society , bitcoin