When we initially gave Bitcoin a “C +” rating, Bitcoin fans were angry .
Even when we gave the exact reasons – high investment risk and lagging technology – they were not very happy.
What most people don’t understand is this: Right from the start, we’ve given Bitcoin the highest score for deployment , which is one of the four key components of our rating model.
And during the past year, even as Bitcoin’s price continued to fall, its uptake improved for five main reasons:
Compared to a year ago, the computing power of the global user base operating in the Bitcoin network has more than doubled.
How do we know that? Because the best indicator of this computing power – hash power – is 2018. from 17 million sharps per second to 38 million per second from January 2006 to today. (See also Graph 1.)
And this is not just an empty technical license. Hash power is the best possible measure of network security. The higher he is, the harder it is for someone to carry out a 51% attack. It is estimated that such a huge venture would cost hackers about $ 280,000 an hour .
The reason is that they would have to lease the necessary computing power from large miners. In addition, there is no mining operation in the world that is close to providing the necessary capacity. And if the attacker wanted to buy all the hardware he needed, it would still be unreasonably expensive – he would have to spend about $ 1 to $ 2 billion .
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Over the last four years, the number of users of blockchain.com wallets has steadily increased (top graph). The problem is that old addresses are almost never deleted, which explains why this figure is rising through good times and bad.
So in order to get a clearer picture, we also need to look at the daily active users of the Bitcoin network. We can see that since April last year, about half a million addresses have been active every day, which is a good illustration of deployment trends.
In the case of a huge bear market, such stability is encouraging.
The number of Bitcoin daily transactions fell from its peak in 2017. to 135,000 in. Given the price crash, this should come as no surprise. Speculators and weak investors did what they always do: They escaped like a rat from a sinking ship.
From then on, the number of transactions rose to 276,000 per day, despite the continued tight market. That’s pretty good already. It tells us that when the panic and hysteria in the market ended, strong, more secure investors remained and became more active.
If Bitcoin 2017. In 2006, transaction fees were often higher than the transaction value itself. By now, they are no longer stupid and have remained at a perfectly reasonable, comfortable level.
At present, the daily fees paid to network miners are about $ 76,000. As it corresponds to about 300,000 different transactions, it makes the average transaction fee only 25 cents.
It is cheap and is another positive factor for deployment.
Lightning Network is basically an innovation from Bitcoin that makes the network faster and easier to expand.
And 2018. During the year, even though Bitcoin ‘s market prices continued to fall, Lightning Network’ s capacity continued to grow.
At the beginning of the year, when the project was just coming out, the number of nodes was practically zero. There are now about 2,600 of them.
At the same time, the number of Bitcoins that can be traded on the Lightning Network increased. At the beginning of last year, it was also practically non-existent. There are now about 500 of them (orange line on the graph) and their value is $ 1.8 million (blue line on the graph).
More importantly, there is plenty of room for growth and the power of the Lightning Network is hardly limited.
Does this mean that Bitcoin will face a higher score? Possible. But while deployment rates have improved, risk / return ratios are still declining. So at least for now, they’re undermining Bitcoin’s overall rating.
The good news is that if the market situation improves, Bitcoin will be able to keep its “C +” rating a thing of the past.
Translation: Lucreds Plus OÜ