It’s time. With 9 years of demonstrated success in seurely tokenizing value, bitcoin is ready for mainstream. Microsoft and other major players are embarking on an ambitious drive to expand crypto offerings globally. The increadible feat that has brought the leading cryptocurrency to this place should not be underestimated. Without the backing of a state, entity, or central authority to ward off an unrelenting wrath of negative sentiment, the experimental digital currency has weathered assaults with astonishing resilience. So what’s next? Ramping up utility, will play a growing role in the future success of bitcoin and other leading cryptocurrencies. Recent announcements by New York Stock Exchange parent – Intercontinental Exchange – that it will be launching a regulated market for bitcoin before the end of 2018, coupled with the disclosure that other major partners such as Microsoft and Starbucks will be joining in the effort to bring bitcoin to the mainstream, is welcoming news for the cryptoasset. Fortune has reported that the campaign running under the banner Bakkt, will set the stage for: the acceptance of bitcoin globally, the inclusion of bitcoin in 401(k), and cracking the $25 trillion annual online payments market that is currently dominated by high credit card and other transaction costs. Shifting these transactions to bitcoin’s lower fee network, will reduce friction in online transactions while adding to the security of bitcoin’s network as fees are redirected to miners who provide the network-securing function. Bitcoin purists are already weighing in, according to the Fortune article; denouncing the role of a major profit-taking intermediary as counter to bitcoin’s raison d’être. The offering of bitcoin as an investment vehicle may be a departure from the original frictionless peer-to-peer payment system proposed by its creator, but does it deminish the utility of the latter? New use cases for bitcoin
In the age of blockchain, funds associated with death, divorce, taxes, and fraud are susceptible to the perils of forks in Bitcoin’s blockchain, in ways that can allow foul play to go undetected. Blockchain forks have opened up new avenues for money to be hidden in plain sight. But what is a blockchain fork?A blockchain fork is created when a cryptocurrency protocol is altered, and miners decide to maintain both the old and the new protocol. Both chains share legacy data, but at the time of the fork (when the new protocol is adopted), the network splits into the old protocol (A), and the new protocol (B). The letter “Y” provides a good visual of how a fork behaves. Blockchains create tokens which are ascribed names such as “bitcoin”; when there is a fork, a new name is ascribed to the new token such as “Bitcoin Cash”. The code or protocol, defines the difference between the two cryptocurrencies. In the case of Bitcoin Cash, a segment of the community proposed a solution for addressing Bitcoin’s scale problem, which the majority did not buy into. This resulted in the creation of Bitcoin Cash – a cryptocurrency that increased transaction throughput in a controversial way; by increasing block size. Cryptocurrency protocols continually undergo code improvements, and in most cases the majority of miners agree to adopt the new code and the blockchain continues its linear progression. When a cryptocurrency blockchain forks, things get interesting. Anyone who owned a bitcoin or a fraction of a bitcoin at the time of the fork, is automatically entitled to an equal number of the new cryptocurrency. The owner of 1 bitcoin at the time of the Bitcoin Cash fork – now owns 1 bitcoin and 1 Bitcoin Cash. This is often referred to as an airdrop
The high cost of mining bitcoin has been sighted as the impetus for one of the largest cloud mining operators to exit the space of bitcoin mining. Fortune reported that Hashflare had encountered 28 consecutive days of unprofitable mining before terminating investor contracts. The move has led to an uproar of investors crying foul. Miners incur costs associated with the purchase of mining rigs, warehousing, and most notably electricity. The incentive to invest is the reward – in bitcoin – that is payed out for securing the network. However, as of late – that incentive has shrunk considerably. Every 10 minutes the bitcoin network pays 12.5 bitcoins to the miner that adds a block of validated transactions to the blockchain. Because miners generally operate in pools, the money is divided between the participants of a pool. In December 2017 12.5 bitcoins were worth about $240,000; today it is closer to $95,000. The bitcoin protocol cuts the block reward in half every four years; reducing the reward for a growing number of miners. Without an appreciation in the price of bitcoin, we may be reaching a saturation point where new entrants who are not able to deploy the most efficient mining rigs, and operate in low electricity cost jurisdictions – will be unable to compete profitably. The picture is somewhat more grim when we consider the second revenue stream for miners – transaction fees. In addition to block rewards, miners collect all of the fees associated with transactions in the blocks that they add to the blockchain. More transactions generally translate into greater reward for miners. While in December 2017, transactions in a block added around $70,000 to the miner’s reward. A glance at recent transactions reveal a staggering decline to 0.06 BTC or about $500. Blockchain.com’s miners revenue chart reveals a