Is Bitcoin dead again?

1 Thought of the Week by Anita Posch

Bitcoin acts like a living organism. It’s a self-regulating, neutral and open financial Internet infrastructure, that is growing and healing itself in case of incidents. This weeks power outage in China and the price drop are the perfect time for another entry in the Bitcoin is dead” database of notable skeptics. It will be the 328th time that it does not die.

Bitcoin obituaries Source

2 Quote of the Week

In the near future, the government having a monopoly on money will seem as strange as the government having a monopoly on religion or language. - Conner Brown

3 Major drop in hash rate due to China

Due to an incident in Xinjiang Bitcoin’s hash rate dropped by an estimate 20-25% from April 15-16th. There a two main areas of mining in China, in the wet season most miners are operating in Sichuan where’s an abundance of excess energy from hydro power stations. In the current dry season mining moves to the province of Xinjiang, where 56.6% of the grid is powered by coal and 43.4% by renewables.

What can we learn from that outage, which gives us many data points:

  • Due to the lower hash rate blocks get mined slower, which leads to higher transaction fees.
  • Bitcoin has a built-in difficulty adjustment. Hash rate is automatically adjusted every 2016 blocks (approx. every 14 days). If the hash rate decreases the hash rate difficulty is lowered, so that the rhythm of mined blocks - one every 10 minutes - is restored.
  • A potential Chinese mining ban would have the same result: Bitcoin in general is not affected. With more Lightning Network adoption in the future, payments will still be cheap and fast. Not every payment has to be settled on-chain.
  • This accident might drive decentralization further, because miners learned not to operate at one single location. Mustafa Yilham from Bixin Group (accounts for 2.5% of all Bitcoin mining) expects more miners moving outside China or to regions that are mainly powered by renewable energy.
  • It seems that the share of global hash rate in China has dropped from 60% in the last year. In a few weeks we will know, if the estimate of Yilham comes true, that China’s share is around 32-40% at most. Which would be the time to stop the story that mining is centralized in China.

4 China recognizes Bitcoin as investment option

5 Turkey bans Bitcoin - Trading volume increases

Last week the Turkish central bank announced a ban on Bitcoin that will take effect from May. Effect: the P2P trading volume in Turkey increased 20% in the last 7 days.

P2P volume last 7 daysP2P volume last 7 days

6 Bitcoin a trojan horse for freedom

People who don’t care about human rights or are anti human rights gonna be forced to buy it and start strengthening its global network effects, they don’t care about what it does for people, but they don’t need to care, Bitcoin doesn’t run on altruism.” - Alex Gladstein, Human Rights Foundation

7 Bitcoin growing faster than the Internet

The Bitcoin adoption curve is very similar to the adoption of the Internet. We are very early, it’s comparable to 1997. But Bitcoin is growing faster.

8 On-chain volume record

Bitcoin transaction volume reached a new all time high in March. $366.3 billion have been sent, @TheBlock__ reports.

On-chain volumeOn-chain volume

9 Don’t fret, price moves without you

Last weeks price drop stresses you out? Don’t, it will go up again.

BTC Price dropBTC Price drop

In the meantime I have a meditation for you: Bitcoin strength and endurance. Hilarious.

Nobody says that what happened in the past will be repeated in the future, but each halving has had three peaks of supply held by short-term holders. We just saw the first drop, it might be that there will be one or two to come, which could result in a prce increase.

HODL wavesHODL waves

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No financial advice. DYOR.

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