40% Bitcoin Price Crashes ๐ / Schnorr Signatures, The Next Big Upgrade The Bitcoin Core Code
Story - 40% Bitcoin Price Corrections 0:54
https://twitter.com/chrisconeyint/status/908661209184002048
Shout out to Twitter user Igor Ybema for reminding me of this tweet that I posted on the 15th of September.
If we click on the image to zoom in we see the Bitcoin price running up 1826 to $5,000.
Then within a couple of weeks it drops from $5,000 to $3,000.
That was a 40% correction.
For the benefit of the podcast listeners, I also drew some arrows on the chart which pointed to the 40% drop with some text saying โ1 year from now, thisโฆwill look like this.โ and then thereโs another arrow pointing to this relatively small price correction from a couple of months before.
My intention was to give myself and everyone else some perspective.
And low and behold, it didnโt take 1 year, it took 3 months because when we switch to the Bitcoin chart of todayโฆ
https://www.coinigy.com/main/markets/BITF/BTC/USD
We see a very similar pattern except at different price levels.
This time we ran up from 5400 to 20,000 and then crashed 45% down to $11,000.
And for those of you watching the video version, this white circle is the previous price crash that I featured in that tweet, it doesnโt even register as significantly.
If this pattern were to continue, then one day we would have a run up to $1m and then a price correction to $550,000.
Hypothetically thatโs true but realistically I donโt think that will happen because by the time we reach a $1m Bitcoin, weโll have a lot more liquidity which will reduce volatility.
In the meantime though, we may get some interim booms and busts that follow this pattern that make the recent crash look equally insignificant.
Story - Schnorr Signatures, The Next Big Upgrade The Bitcoin Core Code 4:32
https://medium.com/@SDWouters/why-schnorr-signatures-will-help-solve-2-of-bitcoins-biggest-problems-today-9b7718e7861c
This comes from Mr Sam Wouters Medium blog. This guy is a speaker and Bitcoin Consultant.
As we all probably know by now there are 2 distinct camps in the Bitcoin community that have opposite ideas about how to increase the capacity of Bitcoin so it can process more transactions.
The Bitcoin Cash community favor an approach that requires more computing resources but is simpler, while the Bitcoin community favor a creative approach where new techniques are invented to achieve more and more with the same resources.
When the Bitcoin Cash community criticise Segwit, the main objection is that Segwit doesnโt improve scaling.
That is true because Segwit was never meant to be a scaling solution.
It doesnโt increase capacity slightly but thatโs not itโs primarily purpose.
Activating Segwit was a step of preparation to lay the foundations for many other technologies to build on. Now that we have Segwit, the road for those additional technologies is clear.
One of those technologies is something called Schnorr signatures.
As far as I understand it, Segwit is a prerequisite to use Schnorr Signatures.
That means the code cannot be easily integrated into Bitcoin Cash in its current form.
In a nutshell Schnorr Signatures as the name suggest, is a new way of handling how transactions are signed so that the signatures use up less storage space, and thus allow more transactions to fit inside a block.
And to put that into perspective, we are looking at a 25% reduction in storage and bandwidth.
This is accomplished basically by having all transactions just have 1 single signature, no matter how many addresses are involved.
[see Todayโs Signatures Image and Schnorr Signatures Image]
But thatโs not all, says Sam.
Another big benefit of this increased efficiency from Schnorr signatures is a reduction in the effect of spam transactions.
If we scroll back up to those diagrams, you can see that if I wanted to spam the Bitcoin network, I could intentionally send dozens of transactions and make sure they involved dozens or even hundreds of different addresses.
The size of those transactions would mean the block space would get full without requiring a huge number of transactions.
With schnorr signatures it greatly levels the playing field since those spam transactions would be on a level with legitimate transactions, each having to pay for only as much space as a single signature requires.
As Sam points out here, the signature is often the part of the transaction that takes up the most space in a block.
Schnorr signatures donโt prevent spam, they would just make them less disruptive to the regular users.
While this all sounds very exciting, the major thing holding it back is the actual adoption of Segwit.
Segwit was a backwards compatible soft fork, meaning Bitcoin can flow in and out of Segwit and non-Segwit addresses freely.
And as we can see from Segwit Party, still only around 10% of all Bitcoin transactions are using Segwit addresses.
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Excellent video. Thanks for explaining in a way I can understand.
Thanks for sharing this,
we are witnessing the birth of a new currency, exciting times!
It will be interesting to see what happens in the future!
BTC had open doord to many other useful coins. Check out my take on a new XAR (Xarcade) coin for the gaming platform. Developer and gamer both benefit. DSO or discounted sale offer happening in about 5 hours at https://xarcade.io
https://steemit.com/xar/@yomaicoin/xarcade-xar-blockchain-for-gamers-and-developers
Thank you for your post. You have been voted up.
Bitcoin is like a tree whose fruits fall sometimes and doesn't look good but at other times it has so many tasty fruits on it that everyone run behind it ..
I will just say hold tight on the fruits they can turn out really tasty ..
There is still 6 Billion people chasing 21 Million BTC. Eventually, we have $1.0M BTC.
That number is less because there is an estimation of around 20% of all btc being lost forever + in our lifetime, we will not witness the last coin mined. I think the number we will be chasing the next decade might be somewhere at around 14 million, which of course gives it much more value.
Good Analogy @himu1111! Investor faith is half the game here. These currencies will continue to grow and have value as long as the community that supports them remains confident.
This is true, but the value of the US dollar will probably plunge after the stock market corrects itself, leaving the value of the dollar like that of the zimbabwe $200,000,000.00 Bank note.
It will be interesting to see how the continued issue of scaling will be addressed in the cryptocurency world. It is going to present continual challenges to developers as the more nations join the economy.
thank you
Follow me @harunbadilli
Hi ,
Nice work sir
Have a feeling when 2018 tickets over Bitcoins shooting towards 25k!
Price will moonshot on January 3rd after everyone has gotten themselves straight with the tax man.
Interesting Medium article, thanks for bringing it up to our attention.
Making spam less disruptive is not what I understood the Schnorr signatures to necessarilyโ affect as a result, but rather to make those attacks more expensive which, of course, could eventually mean less of it.
Sam Wouters wrote:
Enjoyed the read. Thank you!
Fantastic post brotha-man. Next time make it a little more relevant ;-) lol jk man this was ON POINT!