Bitcoin commissions have reached the minimum level for the last year

If you previously refused bitcoin transactions because the fees were too high, now is the time to act: the fees have reached the lowest level in the last 12 months.

According to the Twitter account Bitcoin Core Fee, on March 25, the commission was record low. The fee for making a transaction of a certain volume was received in the next block was 1 satosh per byte. In addition, the processing of the transaction now takes less than 10 minutes.

Information about Twitter advertising and confidentiality
Bitinfocharts, in turn, argues that the average commission has reached a minimum over the past year. When bitcoin in December 2017 cost about $ 20,000, the average fee was $ 55.

One of the many reasons that can explain this decline is that large organizations use transaction bundling to reduce commissions.

Its role is played by the decision to scale Segwit, launched in the network of bitcoins in August 2017. It optimizes the size of blocks, reduces commissions and speeds up transaction processing.

Bitfinex or Bitstamp are just some of the crypto-exchange platforms that started supporting this solution. At the moment, 31% of bitcoin transactions are processed using SegWit addresses, and this share is growing.

The bitcoin community is waiting for the implementation of another scaling solution — the Lightning Network, with which bitcoin can process millions of transactions per second. Theoretically, the implementation of the Lightning Network involves commissions that are close to zero, as well as almost instantaneous transactions. In this case, the stores will massively begin to accept crypto currency as a means of payment. In the meantime, we can just enjoy low commissions in the bitcoin network.

The percentage of bitcoin transactions using SegWit doubled

The percentage of SegWit transactions in the bitcoin network in the last few months, according to segwit.party, was at the level of 10-15%. In recent weeks, several key players in the bitcoin ecosystem (in particular Bitfinex and Coinbase) have included SegWit support, which led to an increase in the volume of SegWit transactions in each new block to 30% in less than two days. In addition, the latest version of Bitcoin Core, the bitcoin reference software, allowed users of wallets to create SegWit addresses for receiving payments. And, as more exchanges, wallets services and other users of the system accept SegWit, the total network bandwidth will only grow.

SegWit is an improved method for processing bitcoin transactions by making more efficient use of block space and correcting the malleability bug, which increases the network bandwidth.

On the other hand, large blocks mean an increase in the size of the complete node (nodes), which can be negatively reflected at the decentralization level of the network (although studies have shown that this should not become a serious problem in the long run and allow everyone to launch their own full node).

It should also be noted that increased bandwidth is likely to help relieve congestion in the short term, as the user base of bitcoin continues to grow.

A more important aspect of SegWit in the long term is to correct the plasticity error of transactions, which will allow using a more efficient implementation of the Lightning Network (LN). It is expected that this second level protocol will largely be able to solve the problem of scaling bitcoin this year already. With the introduction of LN, bitocoins will be limited to the number of users on the network, rather than how often they want to make transactions.

The nature of the bitcoin network makes it difficult to understand which companies exert the greatest influence on the recognition of SegWit, but the size of the American Coinbase (whose CEO claims that it stores about 10% of all the bitcoins in circulation) indicates that the company is now playing a decisive role in this. It is assumed that Blockchain, the most popular web wallet, accounting for about 40% of all bitcoin-transactions, integrates SegWit before the end of March this year.

After the December fever, bitcoin again becomes «quick and cheap»

In the last months of last year, commissions for bitcoin transactions have grown significantly, and with them the volume of unconfirmed transactions in the memPule has also grown. For example, during the peak of bitcoin in mid-December 2017, a commission of more than 1,000 satoshi / bytes was required to be included in the next block.

For a standard transaction (without SegWit) at a bitcoin rate of about $ 15,000, the commission was about $ 75 (commission is paid in bitcoins, and the dollar value of the transaction is related to the current rate).

The growing commissions fueled the discussion that the major players in the industry were not quick enough to implement the SegWit protocol update, and several successful implementations of the Lightning Network technology had to bring the fees closer to zero at all.

Nevertheless, the block space in the bitcoin block has very limited possibilities: one way or another the block will not be able to accommodate more than several thousand transactions. This constructive feature is important for encouraging the development of a competitive commissions market, designed to ensure network security in the long term.

In the distant future, when the reward for the creation of the blocks disappears, the incentive for the miners to maintain the network will be only commissions for transactions. Each halvening («halving» once every four years of release of new bitcoins) increases the reward of the miners by commissions, as bitcoin is approaching the limit of its fixed offer of coins.

At the same time today, bitcoin transactions have again become cheap, even if we do not take into account the comparatively low rate of the crypto currency. At the time of publication, the commission was about 34 satoshi / bytes for inclusion in the next block (10 minutes waiting) and 16 satosh / bytes for inclusion in one of the next six blocks (one hour).

The largest stock exchanges continue to implement SegWit, and the network now employs more than 800 nodes of the Lightning Network, which daily increase its throughput.

Commissions are and will be an integral part of bitcoin, but for the most part the transactions of the main crypto currency are still a viable alternative to traditional bank transfers.

How it all began: An announcement of the very first version of Bitcoin from Satoshi Nakamoto

Yesterday, on February 26, the official release of Bitcoin Core 0.16.0, the 16th generation of the original bitcoin software, took place.

In this regard, we decided to recall the very first release, which took place more than nine years ago, on January 9, 2009. He was introduced by Satoshi Nakamoto in an electronic mailing to a narrow group of Shifropankov and was ignored by the media.

This correspondence is especially interesting because it preserved the views and hopes of people who were engaged in bitcoin in pure enthusiasm and did not know what impact it would have on today’s understanding of the economy and the monetary system.

So, the historical release was a small letter:

«Announcement of the first release of bitcoin — a new electronic cash, which uses a p2p network to prevent double spending.

It is completely decentralized: without a server or centralized power. Screenshots on bitcoin.org.

Download link: http://downloads.sourceforge.net/bitcoin/bitcoin-0.1.0.rar

So far, only for Windows. Open source code is included in C ++.

The software is still at the alpha stage and is experimental. There are no guarantees that the system will not need to be restarted at any time, although I did everything I could to make it expandable and versioned.

You can get coins by asking someone to send them to you or by running «Options -> Generate coins to start a site and create blocks».

To begin with, I made the Proof-of-Work complexity ridiculously low, so that a typical PC will be able to generate coins for a few hours in a while. This will become much more difficult when competition forces you to automatically raise complexity.

The generated coins must wait 120 blocks to «mature» before they can be spent.

There are two ways to send money. If the recipient is on the network, you can enter his IP address and connect, get the public key and send the transaction with comments. If the recipient is not on the Internet, you can send funds to his bitcoin-address, which is a hash of the public key that he gave you. It will receive a transaction that will be included in the block, the next time it is connected to the network.

This method has a disadvantage: you can not send information in the comments, and the percentage of anonymity can be lost if you use the address several times. But this option is useful if both users can not be online at the same time or the recipient can not receive incoming data.

The total number of coins will be 21,000,000. The new coins will be distributed among the nodes that produce the blocks, and the number of coins will be reduced by half every four years.

The first four years: 10,500,000 coins;
the following four years: 5,250,000 coins;
the following four years: 2,625,000 coins;
the following four years: 1 312 500 coins
etc…
When this is over, the system will continue to support commissions for transactions, if necessary. The system is based on open market competition, and there will probably always be nodes ready to process transactions for free. »

Satoshi Nakamoto

Already at that time bitcoin was «betting» and predicting a staggering cost to him. On January 11, the late Hal Finney, the famous American programmer, who the next day became the world’s first recipient of bitcoins, responded to Satoshi’s letter:

«It is interesting that the system is configured for a certain maximum number of coins that will ever be created. I think the idea is that the amount of work required to create a new coin will increase over time.

One of the main problems in the case of any new currency is its valuation. Even if you ignore the practical problem (no one will take the currency first), it is still difficult to argue for the benefit of a particular non-zero coin value.

As an amusing thought experiment, imagine that bitcoin becomes the dominant payment system used throughout the world. Then the total value of the currency should be equal to the total value of all the riches in the world. Known to me, current estimates of total world wealth range from $ 100 trillion. up to $ 300 trillion. If you translate this into 20 million coins, then the cost of each will be $ 10 million.

Thus, the opportunity today to generate coins with a cost of several cents of processing power can be a pretty good bet with compensation in the ratio of 100,000,000 to 1! Even if the chances of bitcoin to achieve the above described success are small, is this really one chance against 100 million? There is something to think about … »

Hal

As early as October 5, 2009, the Bitcoin rate was first published on the New Liberty Standard exchange. It amounted to 1,309.03 BTC for one dollar, and on December 16 the version of Bitcoin v0.2 was released.

«Whales» became even richer during the market collapse

A hundred so-called «whales», that is, the largest owners of crypto-currency, successfully took advantage of the fluctuations in the rate. According to data collected by Bitinfocharts.com, most of the 100 richest bitcoins did not lose their assets during the last crash. On the contrary, their shares have increased exponentially.

For example, the largest address contains more than 167,000 BTC (at the time of publication). The address began collecting bitcoins about two years ago, and the first deposit was about $ 840 at the current rate. Currently, the wallet contains $ 1.4 billion. The largest revenues were recorded during the major crashes. Throughout 2017 there were six major corrections, in which bitcoin lost about 30% of the cost. Just in these periods, the largest deposits were made.

The same picture is typical for other large addresses. Many of them sold thousands of bitcoins from November to December 2017. The community constantly monitors «whales», and often on forums or on Twitter you can see messages about the movement of assets at their addresses. For example, on November 12, 2017, when the bitcoine rate reached a new price high, observers observed that 25,000 bitcoins were sent to the Bitfinex stock exchange from the purse of the notorious Roger Vera.

Many media outlets suggest that 1000 addresses own 40% of the market. Some believe that «whales» know each other and this leads to great speculation in the market. Kyle Samani, managing partner of Multicoin Capital, supports this theory and says:

I think that there are several hundred guys who can call each other. And they, most likely, and do.

Nevertheless, a study published last fall disproves the assumption that 1,000 people have 40% of all bitcoins. According to the data collected by Bambou Club, many models of the distribution of bitcoins, analyzing wallets and addresses, do not stand up to criticism. Bambou Club draws attention to the fact that most assessments can not determine the relationship between the owner, wallet and address. The report says that this is not necessarily a ratio of 1: 1: 1:

One person can have a lot of wallets. And the purse can use a lot of bitcoins (for the sake of anonymity it is desirable to generate a new address each time you use your wallet).

Using another method of data collection, Bambou Club concluded that there are more than 25 million bitcoins owners, and 0.153 BTC is enough to enter the 30% of the richest. Moreover, you only need 15 bitcoins to enter 1% of the rich.

We do not know if the «whales» work together to speculate at the cost of the bitcoin course. But we know that during periods of various market fluctuations and especially during the period of the fall of the exchange rate by almost 70%, many of them became even larger players.

Who are these rogueurs and why they determine the cost of bitcoin

Every day more and more investors agree that the invention of bitcoin led to the creation of a new asset class.

Whether the price of bitcoin will grow in the same way as last year is an open question, but it is obvious that crypto-currencies can not so easily disappear in one day. Despite this, many world-renowned economists and Nobel laureates still do not understand the value of bitcoin.

With the creation of a new asset class, the complex question of assessing their fundamental base value arises. Profit and loss statements can be used to theoretically estimate the traditional means of saving, but for bitcoin such data are not available. In recent years, several different schemes for assessing the currency have appeared, but price forecasts based on traditional analysis usually end in complete failure.

In the community, from time to time, the theory is discussed that the trailers have the greatest impact on the bitcoin price, and transactional turnover is not so important. But for some reason they do not pay much attention to it.

In early 2014, this point of view was devoted to the whole article, although the concept in it was stated theoretically, and not proved with the use of empirical data. The main idea is that the price of bitcoin (in US dollars or any other fiat currency) as a whole will be determined by the desire of the holders to redeem it from circulation.

To better understand this theory, you need to delve deeper into the strategy of the chopper and find out who it is.

No, it’s more than a typo in the word holder. And no, this is not an abbreviation of hodl, which stands for holding on for dear life («grabbing for life with all my might» or «holding on to the last»).

Hodl is a meme that appeared in a drunken post on the Bitcointalk.org forum back in late 2013, when the price of bitcoin collapsed amid news related to the regulation of crypto currency in China.

The essence of the post was in the priority of long-term storage of bitcoins as opposed to day trading, and the meme became a kind of motto for the owners of crypto-currencies, who are ready to hold their assets in any market situation.

And now the traitors are not going to leave. They are the main support group for collapses of 25% per day or 50% per month. Moreover, on such landslides they only make purchases.

Chodlers believe in the value of bitcoin on an almost religious level. Some of them keep bitcoin for political reasons (they would prefer that it is the world’s main currency, not the US dollar or another fiat), others simply see in it the inevitable future of the financial system. The Hodgers keep it because they are convinced that bitcoin is digital gold. They understand the value of a censorship-free form of electronic money in an increasingly digital world.

In other words, the crocheters are the basis for the cost of bitcoin. As soon as a sufficient number of people sell their stocks, there will remain the trailers, who will want to buy even more and increase the volume of their assets.

A real holler will never sell bitcoins. Instead, he will patiently wait for the day when their use will become ubiquitous, and daily transactions will be carried out through an open digital payment system. A well-known meme based on the scene from the «Matrix» says that by that time the trailers will no longer need to sell their bitcoins, because there simply will not be a reason to bring them to the Fiat.

A long-term logger and PayPal board member Wencesz Casares argues that bitcoin will eventually become a global, policy-independent standard of value and trust.

In the long term, it is the cholesterics that have the strongest impact on the cost of bitcoin, but is there a way to measure their collective impact? The answer is no.

The key problem is that it is difficult to detect tracers in a blockhouse. It is unclear whether someone is a real tractor until a couple of serious crashes happen.

Co-founder FundStrat Tom Lee compares the total number of addresses of bitcoins and the average amount of transactions (in dollars) between these addresses to determine the common user base. But, again, not all of them are tracers.

Last year, a LendEDU study was published, which indicated that conventional Holders would sell for about $ 200,000 for bitcoins, but they were Holders, not Rollers. Perhaps many of those who participated in the survey sold their bitcoins during one of the sharp price drops over the last month. Price jumps, as a rule, show who the real hoopler is, and who is just a Holder.

Each short-term price bubble of bitcoin attracts new users to this asset, and some of these can turn into choppers. Therefore, instead of looking for information that can be used to predict the daily price movements of the most popular crypto currency, it is better to listen to the advice of a drunk beatcoin enthusiast of the 2013 model and just keep to the last.

Based on the article «The Fundamental», «Bitcoin Valuation Metric That Determines», «The Cryptocurrency’s Price Moves» by Kayla Torpy

Bitcoin.org site stopped advertising bitcoin as «fast» and «cheap»

The Next Web publication drew attention to the fact that Bitcoin.org (not to be confused with Bitcoin.com, which is closely linked to the competing Bitcoin Cash crypto currency) has changed the advertising of bitcoin.

Now instead of telling the public about «fast» transactions and «low commissions», the site advertises the technology as allowing to carry out p2p-transactions, international payments, and also to defend against scammers. You can see the changes in the English version of the site, and in Russian, speed and cheapness are still moving forward.

By changing advertising slogans, it can be assumed that bitcoin developers are beginning to view technology more as a digital asset than a real currency.

Recently, several technical solutions to the problems of low speed and insufficient efficiency of transactions in the bitcoin network have been proposed, but none of them has yet won the wide recognition of the crypto community. The most famous and expected solution is the Lightning Network protocol, which is already beginning to be tested in the main network.

In the meantime, the users are faced with a rhetorical question whether they should pay a commission of $ 20 for a transaction of $ 10. When it comes to small amounts, other crypto currencies may be preferable to bitcoin in this respect.