Misconceptions break the series, and the big drop in bitcoin does not cause a death spiral

In the past month, bitcoin has been hit on the price, from roughly around $$6000 down to $$3000. So many people began to discuss in the present situation, the bitcoin network may exist in the potential of “death spiral” (Death Spiral).

According to the security expert and researcher Andreas Antonopoulos (proficient in encryption currency bitcoin author) said, bitcoin network unlikely death spiral.

What is the death spiral?

In the bitcoin network, miners roughly every 10 minutes will find and dig out a full trading block. 2016 was excavated in gold block after the network to automatically resize bitcoin mining difficulty, so if the network on the whole network is low, the miners can bitcoin mining with low difficulty, so as not to cause a slow and let the miners not to block incentives, resulting in losses. Vice versa, if the network is increased, mining difficulty will also increase, let bitcoin stop “out of money”.

Death spiral bitcoin refers to the network after the difficulty was dug up in 2016 blocks, the miners are still continuing to reduce stress, lead to the network is sustained and rapid decline in the system cannot automatically adjust the difficulty.

Because the original every 2016 blocks up roughly takes two weeks, but if the whole network is reduced continuously, the original two week adjustment doubled into round, then the miners continue to make money, it will close the mill, will lead to a decline in computing power chain, resulting in bitcoin network system of the crisis.

“Some people think that if the” death spiral “, so many miners will say ‘well, I’m not to earn money, because the calculated stress decreased by 50%, so I want to turn off my machine” and then cause is further reduced, leading to a block becomes slower, so in a death spiral, difficulty to adjustment. “Antonopoulos explained.

Bitcoin will have the death spiral?

In the short term, because the price zoudie currency, in the past two months, bitcoin Hashrate has fallen from about 50 exahash to 37 exahash. But the long term, since January 2018, the hash of the bitcoin network rate increased from 12 exahash to 37 exahash, with a period of years, the network is increased by more than three times.

Bitcoin – year network stress chart (source: – Blockchain)

However, Antonopoulos believes that this is unlikely to be achieved in the bitcoin protocol, because the ecological system of the miners usually adopt a long-term strategy to operate machine.

Most of the major mining center will power and equipment settings can be used for many years, the miners do not rely on network operators, based on a weekly plan to meet their needs. Especially in the Chinese areas such as power supply and cold climate, many mining centers operate here, a mining center must ensure long-term supply to maintain its facilities.

Therefore, the miners will seek long-term performance and profit, rather than short-term. Therefore, if bitcoin is decreased and as the price falls and mining assets profit becomes more and more low, the miners may continue to open their machine, until the asset recovery value and profit again.

Public chain network theory may appear on the death spiral, and in the past had occurred in a small encryption currency. However, if taking into account is the current size of the bitcoin network of the whole network, death spiral is unlikely to happen.

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