Aug 122016
 

Bitcoin Halving Statistics

This is a guest post from James Freeman

On 9th June 2016, Bitcoin reached a very important milestone – the second halving. In Bitcoin, halving occurs after about every four years, during which the mining reward is reduced by half. It’s a planned part of the Bitcoin ecosystem that controls the new supply of the cryptocurrency in the market. In the second halving, the reward went down to 12.5 BTC from 25 BTC. The block 420,000 was recently mined by Chinese Bitcoin miner F2Pool, setting the milestone of the first reduced block mining reward since 2012. The block contained 1,257 transactions, with an estimated transaction value of 1,688.69 BTC. The third halving is scheduled to occur sometime in 2020. So let’s compare the facts and figures between first halving that took place on Nov 28, 2012, with the second halving that occurred recently.

The Basics

The relatively higher hash rate of the Bitcoin led to an earlier second halving. It occurred five months earlier than it was scheduled. Hash rate determines how powerful the miner’s machine is, and the profit of a miner is directly proportional to the hash rate, so this rate is adjusted every 2016 blocks and hash power increases or decreases in between. First halving was done after the mining of 210,000 blocks. The second halving is done after the mining of 420,000 block. At the time of first mining, 10,500,000 Bitcoins (50% of 21 million) were in circulation and at the time of second halving, 15,750,000 Bitcoins (75% of 21 million) are in circulation. After first halving, inflation rate (yearly) also dropped from 25% to 12.5%. In second halving, the inflation rate dropped from 8.4% to 4.2%.

Price

Over the past few years, Bitcoin experienced a sharp rise in the price and gained the attention of the masses. It had been trading around $12 and reached a high of $30 after the first halving. However, after a few months, it reached to $266 in April 2013. The price kept rising until it touched the all times high of $1200 in November 2013. Currently, Bitcoin has been traded around $585. In a nutshell, Bitcoin experienced 5400% increase in the exchange rate from first halving to the second halving. Similarly, market cap increased from $128 million to $10 billion, which is 8000% increase.

Mining

Back in 2012, most of the Bitcoin miners used Graphic Processing Units (GPUs). The miners were also fewer in number. However, the number of miners significantly increased due to Bitcoin’s increasing prices and the advent of new hardware in the form of Application Specific ICs (ASICs). Now with the new ASIC-hardware, Bitcoin mining is being done more professionally, out of reach for the hobbyists. Miners mine Bitcoins in specialized data centers located in the areas where electricity is cheap and stable. At the time of the first halving, mining difficulty was calculated to be 3,438,908, and now it has reached to 213,398,925,331. Similarly, the estimated hash rate has also been increased from 25 terahash/sec to 1,520,833 terahash/sec which is 6,083,232% increase. The decrease in Block value due to second halving is approximate $16,875+ to $8438+ whereas in the first halving the block value decreased from $600+ to $300+.

Industry

After the first halving, the Bitcoin industry started to gain the attention of investors, but it was not significant. However, in 2013, China’s interest in this currency increased, causing not only skyrocketing of Bitcoin’s price but also grabbed the attention of many investors. Now many venture capitalists and corporate investors have been taking a lot of interest in Bitcoin industry. Some of the prominent corporate investors of Bitcoin industry are Andreessen Horowitz, Tim Draper, AXA, and Goldman Sachs. At the time of first halving, the total industry wide investment was $2.1 Million and now it has reached to $1.1 Billion. Largest investment round publicly announced per company in 2012 halving was $1,500,000 and its $116,000,000 now. Similarly, largest commulative investment increased from 1,500,000 to 121,050,000.

Liquidity

Back in 2012, there was a single exchange “MtGox” for Bitcoin trading. Now that the number of exchanges has increased significantly and they are located at different locations around the globe, trading volume has also exploded along with other growth metrics. The increase in trading volume is hard to calculate because some exchanges provide fake information. The total trading volume on daily exchanges has approximately increased from 40,000 BTC to 2,000,000 BTC. Similarly, at the time of first halving, MtGox used to be the largest exchange by liquidity with 30,000 BTC per day, but now Bitfinex is the largest exchange with 57,150 BTC per day.

Adoption

The number of Bitcoin users is not easy to calculate as anyone can access and download the software. Therefore, the total number of users can’t be determined. However, based on day-to- day usage stats, one can confidently claim a significant increase in Bitcoin adoption after the first halving. Daily on-chain transactions have increased from 30,000 to 200,000. At the time of first halving, the daily on-chain transaction was $3,000,000 and at the second halving, it is $200,000,000. The number of total merchants at the time of first halving was 1,000+ and now its 100.000+. Largest BTC accepting merchant has also shifted from WordPress to Microsoft in these four years.

Scalability

The scalability of Bitcoin network has always remained a controversial topic because of some hurdles that tend to hamper Bitcoin’s growth. This issue resulted in high cost of participation in the network and resources that are needed to run a full node. Average block size and block chain size were approximately 0.1 MB and 4 GB respectively at the time of first halving. Now, after the second halving, the size of average block size has increased to 0.8 MB and blockchain size has increased to 75 GB. The unspent transaction output (UTXO) at first halving was 117 MB and it’s 1412 MB after second halving. Node count at the first halving was 10,000 and now it stands at 5,000.

James Freeman works as a Senior Analyst for The Bitcoin Banc – A Bitcoin Auto Trading Platform.

Photo Credit: clemsonunivlibrary

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Jun 052016
 

Bitcoin Price Surge

This is a guest post by Andy Jenkins.

Things have been relatively quiet on the news front for bitcoin for some time, but that doesn’t mean the digital currency has gone anywhere. In fact, bitcoin has been steadily gaining momentum, rebuilding its value since bottoming at the beginning of 2015. Bitcoin has managed to bounce back from its first big test and another one is coming this summer.

Now that bitcoin has been stable for the better part of the year, fans of the cryptocurrency are preparing themselves for the next potential surge for its value. With the rise in value of Bitcoin, competition for “mining” Bitcoins is also on the rise, and the mining difficulty has been steadily increasing throughout the year.

Mining, for those unfamiliar, is a complex process specifically designed to be both difficult and time-consuming to keep the amount of bitcoins created at a near constant rate of issuance. Even as competition has heated up in the mining space, with more and more companies entering the fray and using more efficient equipment, the number of bitcoins is still issued at a fairly stable rate of 25 bitcoins per 10 minutes. There’s a limit on the total number of coins that can exist, set at 21 million. This helps to prevent any further inflation and devaluing seen from the overproduction of currency, like in traditional government backed currencies.

In order to ensure that the limit of 21 million coin mark is honored by the Bitcoin network, the value of mining bitcoins is cut in half every four years. Essentially, if 50 new bitcoins are created every 10 minutes, then now only 25 would be able to be created. The next time the halving will occur will be this July, and bitcoin enthusiasts are expecting prices to skyrocket when it happens. As the desire for bitcoins continues to increase and the rate of production is cut in half, prices are expected to go up accordingly.

It has now been more than seven years since the inception of bitcoin and the cryptocurrency is only becoming more commonplace with consumers. In 2012 (the last time mining was halved), a bitcoin went for close to $12 and had a market capitalization of around $100 million. Chump change compared to the rest of the world economy. However, fast-forward to today and a bitcoin is holding steady between $400 and $450 with a market cap of nearly $7 billion. Now we’re talking about some serious cash. Usage of bitcoin hit a record high in 2015 and apparently a good portion of this is through payments to major retailers. Businesses such as Dell and Overstock.com are reporting that up to 20 percent of their network activity now involves the currency. This is a far cry from its beginnings as the preferred method of payment on gray market platforms such as the Silk Road.

2016 has already been an interesting year for bitcoin, to say the least. With the halving coming around the corner, it’s only going to get more exciting this summer and bitcoin is looking like the most attractive investment it’s been in years.

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Sep 012015
 

Bitcoin Capital Regulation

This is a guest post by George Basiladze of Cryptopay

Regulation has been an important buzzword in the Bitcoin sector over the last year or so, as it has become apparent that it will be necessary to bring about greater adoption and use of the innovative technology. Over the last few months, the authorities in a few jurisdictions have approached this potentially difficult obstacle in different ways; the UK government has investigated a number of initiatives intended to help bring regulation to the digital currency sector. In New York, the BitLicense regulatory framework has been introduced, but has been subject to a great deal of scrutiny and dissatisfaction from within the Bitcoin industry. A number of companies have ceased operations within the state as a result of the release of the controversial regulatory framework.

Other countries have chosen to impose bans on the cryptocurrency, perhaps slightly misinformed or over-cautious of the potential negative impact of an alternative currency. For example, Russia announced in October 2014 that it would issue fines to those engaging in “transactions with a cybercurrency and creation and distribution of software used for the issuance of monetary surrogates”. China has also opted to place restrictions on the use of Bitcoin and other cryptocurrencies, choosing to define it is a special “virtual commodity” which is not an acceptable currency and shouldn’t be circulated within the market as such. Prior to this, China had been responsible for a large amount of interest in Bitcoin, with many suggesting that it was investment into Bitcoin from within the country that was responsible for a significant price growth in the early Bitcoin market. As such, when it became apparent that the Chinese authorities were considering prohibiting banks from working with digital currencies, the result was a fall in the Bitcoin price.

Ultimately most will agree that some form of regulation is needed to help the maturing Bitcoin market develop further. Authorities will always have concerns about potentials abuses of cryptocurrencies for nefarious purposes; money laundering has been a concern and regulation will surely attempt to bring Bitcoin activities in line with existing anti-money laundering laws. Regulation aims to protect consumers and although Bitcoin is a well-designed system, it is still vulnerable to scams and fraud. Balance will be vital as the minefield of regulation is tackled; there must be collaboration between the existing industry and authorities, if the process is to successfully help consumers without hindering innovation and entrepreneurship.

The widely varying approaches leave many interested parties unsure as to WHERE, if anywhere, will emerge as a “Bitcoin Capital”, with industry centred around it. New York was a hot-bed of cryptocurrency activity before the notorious BitLicense, but a clear geographical centre of Bitcoin business is yet to emerge. Authorities will perhaps compete to welcome this industry; UK Chancellor George Osbourne expressed his desire for the UK to become a Bitcoin capital last year, but this is yet to translate into significant growth within the cryptocurrency sector in the UK. In reality it is likely that multiple Bitcoin capitals will emerge, with at least one either side of the Atlantic, in both Europe and the USA respectively. There is also the large Asian market, which would likely end up with its own centre for digital currency activities. So ultimately we’ll likely see three or four cities which become hives of cryptocurrency and Bitcoin innovation; the locations of which will be down to regulators awareness of the potential benefits that encouraging Bitcoin business could bring to an area.

Author: George Basiladze
George is a finance guy with an in-depth knowledge of financial systems. Together with Dmitry they designed the concept of Cryptopay in May 2013 and started developing the system.

Photo Credit: Flickr

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Jun 172015
 

This is a guest post from Ofir Beigel of 99Bitcoins

Since Bitcoin has come to the public awareness in 2013 there have been many books written about the currency. These books cover different topics such as Bitcoin basics, Blockchain overviews, ways to make money with Bitcoin and the history of Bitcoin. In today’s post I’d like to cover the 4 top selling books available today about Bitcoin.

 

Book Mastering Bitcoin#1 – Mastering Bitcoin: Unlocking Digital Cryptocurrencies

Author: Andreas M. Antonopoulos
Format & pricing: Kindle ($15.49), Paperback ($33.24)
# of pages: 298
Published: December 20th, 2014
Pros: The ultimate guide available today about the Bitcoin mechanics, proven record of excellence by Amazon readers.
Cons: Not for beginners, requires a technical orientation.

Overall review: Andreas M. Antonopoulos is a California-based information security expert, tech-entrepreneur and author. He’s a consultant on several bitcoin-related startups and permanent host of the Let’s Talk Bitcoin podcast. He also served as head of the Bitcoin Foundation’s anti-poverty committee until 2014, resigning due to disagreements with its management.

Mastering Bitcoin is considered to be the best technical reference about Bitcoin today. It’s sort of the ultimate guide to understanding what Bitcoin is and how it works. Having said that, the books seems to be geared much more towards technical people and developers who are trying to build Bitcoin related apps and software.

The book gets an astonishing 4.9 stars from 28 reviews on Amazon with no negative reviews at all. The neutral reviews (3 stars) talk about the fact that the book is indeed too technical.

 

Book The Age of Cryptocurrencies#2 – The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order

Author: Paul Vigna and Michael J. Casey
Format & pricing: Kindle ($14.99), Paperback ($18.00), Hardcover ($19.77), Audible ($19.95), Audio CD ($40.00)
# of pages: 368
Pros: Excellent entry level book. Great overall overview about money and cryptocurrencies as a  whole.
Cons: Gives Bitcoin “an easy pass”, a bit too long.

Michael J. Casey writes for The Wall Street Journal, covering global finance in his “Horizons” column. Paul Vigna is a markets reporter for The Wall Street Journal, covering equities and the economy.

The Age of Cryptocurrency doesn’t just look at Bitcoin but rather on the whole concept of money and how Bitcoin is disrupting it. For those who found Mastering Bitcoin too technical this is a great entry level book into the world of Bitcoin and its adoption today.

Most of the critique passed on this book regarded the fact that it’s a bit too long and that it gives Bitcoin “an easy pass”. Meaning, it talks a lot about the adoption of Bitcoin but not so much about its actual success or failure as a currency. Someone reading this book may be mesmerized by Bitcoin’s success without understanding the hardships it’s going through as a payment form or the competition around it.

 

Book My Dirty Little Bitcoin Secrets#3 – My Dirty Little Bitcoin Secrets: How to profit from the Bitcoin Economy
Disclosure: This is the guest author’s own book!

Author: Ofir Beigel
Format & pricing: Membership Website ($27.00), PDF ($27.00)
# of pages: 278
Pros: A detailed step by step guide to creating a Bitcoin business, no prior knowledge of Bitcoin needed.
Cons: Isn’t solely related to Bitcoin, but rather more to the business opportunity around it.

Ofir Beigel is an independant Bitcoin blogger and online marketer who has been operating 99Bitcoins since 2013. His main focus on his blog is how to make Bitcoin accessible to newbies without it sounding too technical or complicated.

My Dirty Little Bitcoin Secrets takes a different take on Bitcoin. It’s not a book about the currency itself but rather about ways you can profit from the Bitcoin industry. The author explains how he managed to form a steady income from the Bitcoin industry without needing to take the risks involved in mining, trading or investing in Bitcoin.

Reviews claim that on one hand the book gives a solid and easy to understand explanation about how to make money from the Bitcoin industry. On the other hand the concepts explained in it aren’t unique to Bitcoin and can be applied to many industries online. The author uses mainly online marketing techniques to generate his profit.

 

Book The Book of Satoshi#4 – The Book Of Satoshi: The Collected Writings of Bitcoin Creator Satoshi Nakamoto

Author: Phil Champagne
Format & pricing: Kindle ($2.99), Paperback ($14.95), Hardcover ($25.89), Audible ($17.95)
# of pages: 394
Pros: A fascinating and surprisingly readable background to the genesis of bitcoin.
Cons: Most of the stuff written in this book can be found scattered online. Not a deep technical dive.

Phil Champagne is Managing Director of Wren Investment Group, LLC. His background in software engineering combined with his interest in history, investments, and macroeconomics (Austrian School of Economics) naturally led him to explore and then become a passionate advocate of the Bitcoin technology and its social implications.

You can consider The Book of Satoshi to be “the history book of Bitcoin”. The book basically takes the essential writings that detail Bitcoin’s creation. Examples include Satoshi Nakamoto emails, posts on computer forums, the seminal paper which started Bitcoin, etc.

Even though this may seems just like a rehash of stuff you can find scattered online, the author has added significant value by sorting through them and adding his own editorial comment and introductory paragraphs.

The book managed to gain a 4.7 rating from 20 different reviews on Amazon, none which seem to be negative.

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Apr 042014
 

This is a guest post from Joe Towner. Enjoy the read, and don’t forget to comment!

Confessions of a Bitcoin Convert

When I first started researching Bitcoin to write a guide for small businesses, my knowledge of the technology and its applications were minimal. I understood the basic idea of a virtual currency, was baffled by the actual process of creating it (mining, block chains, etc.) and intrigued by the fact that the potential application for Bitcoin and the belief of its supporters went far beyond some kind of virtual gift certificate.

The biggest opportunity for businesses with digital currencies is a further level of middle-man being stripped away from the process of trade. E-commerce has allowed start-ups, small businesses and individuals to reach out directly to consumers without the need for investing in physical locations or relying on retailers, which has led to the demise of bricks-and-mortar stores across the developed world.

In this same way Bitcoin strips away the financial institutions that act as barriers to commerce rather than facilitators. Credit card companies and payment processors like PayPal charge membership fees, transaction fees and restrict who can use their services. Of course they have certain responsibilities and safeguards when it comes to the use of their services, but these limits can stop genuine users from accessing the ability to exchange their goods and services.

So how does Bitcoin continue to convert people like me, to transform a passing acquaintance of the concept to the belief in its power?

Infrastructure

As the collapse of MtGox demonstrated the infrastructure that helps facilitate the spread of Bitcoin is still on shaky foundations. Experienced Bitcoiners may know how to buy their Bitcoins, keep their investment safe and to take certain precautions, but the lack of established systems to buy and store is still very off-putting to the uninitiated. Things are gradually improving and will do so more quickly as growth in demand drives faster change; the technology of Bitcoin has been shown to work, the technology that delivers needs to be proven next.

Usage

Hands up how many people bought Bitcoin because they heard the value was skyrocketing and wanted to get in early and hands up how many people bought Bitcoins to exchange for coffee at a local cafe? In the general consciousness Bitcoin is still viewed primarily as an investment, that’s likely in the middle of a bubble, something you’re better off collecting and keeping, why spend something that’s sure to go up in price? The only thing that will demonstrate the usefulness of Bitcoin is an increased volume of spending, this will show its effectiveness as well as helping to stabilize the value.

Time

We all know how reluctant people are to embrace new technology, that is until it reaches a tipping point at which the benefits become incontrovertible. Normality and familiarity are key drivers of any product, service or technology and the only thing that drive them is time.

As a Bitcoin convert who approached it from a business perspective, I can see how it functions as both a powerful piece of technology and as something revolutionary that fits with certain democratic and libertarian ideals. On a practical level, what will determine the success of Bitcoin, or any future digital currencies that come along, will not be the impressiveness of an algorithm or a belief in free trade, but how stable, how easy-to-use, how widespread and how useful it can be to the public.

Joe Towner blogs on finance and business for borro Money and recently published Buy Into Bitcoin, a guide to digital currencies for small businesses and entrepreneurs.

Photo Credit: jokica_87

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