Bitcoin price was lagging in the Bitstamp chart at the time of the initial advance. Today it leads to the upside.
Time of analysis: 15h00 UTC Wednesday
From the analysis pages of xbt.social, earlier today:
Although a laggard at the time of the initial surge (as was also the case in June), the Bitstamp chart ends up giving us the most moderate price action and is currently leading to the upside.
Well, we know trend is up, so while the rest of the market "comes round" to it, it may be worthwhile considering the latest activity of Bitcoin "Jesus" (or Judas, according to your view).
Ver's disillusion with Bitcoin ever becoming a Visa-like payment network has led him to sell some bitcoin in favor of US dollars and some altcoins. After years of reciting the same lines over-and-over, he has now found that neither reiteration, nor millionaire status, will sway consensus to his opinion about Bitcoin.
Ver has provided nothing but alleged likelihood that a big block size will make more people come to the party. He fails to include notions of "Induced Demand" (more supply == more demand) as well as the market phenomenon whereby greater liquidity increases price volatility.
Big block advocates seem to be united in their sense that increasing block size will increase the number of users, and that this spreads the benefits of Bitcoin which is, surely, a Good Thing.
If only it was that simple. Bitcoin is surprisingly difficult to scale if we are to retain its degree of decentralization and censorship resistance. Do we compromise the value of the thing itself for the sake of making it more popular? What is the objective gain of such a compromise? Ver does not address this point in his recitals. Nor does he answer direct questions about the implied dilemma. The stakes of Other People's Money are high and observed facts about the Road to Adoption are to be laid out on the roundtable. Populist opinion shouting is not science, right?
Well, few of the Big Blockers are likely to capitulate on their threats (e.g. that other altcoins can come to dominance) by selling much bitcoin anytime soon. Ver is one of the collection of Cargo Cult populist priests promoting the idea that a larger runway (block size) will invite larger cargo (adoption) deliveries from the gods. According to Ver's estimation, global adoption will easily put bitcoin at $100,000 BTC/USD.
This writer had once been a proponent of big blocks. Yet, through kind and patient discussion some developers and thinkers in the space had explained the stakes and dynamics of block size and understanding dawned. Degree of decentralization and censorship resistance are the bedrock of Bitcoin security.
We all understand the bare fact that without security Bitcoin becomes meaningless and without value. And protocol security is not a fundamental (inherent) characteristic of Bitcoin - it is something that needs to be maintained and protected. In this sense Bitcoin is fragile. The majority of Bitcoin users and participants seem to have come to this correct understanding. Now, the ecosystem must engage the next conceptual challenge facing it, namely, Induced Demand.
The principle of Induced Demand has various interpretations but comes down to the phenomenon whereby increased supply of a resource, typically, leads to increased demand for the resource.
The principle is well understood (and applied) in large scale networks such as national healthcare and traffic network planning. Transport planners often confront the dilemma whereby increased capacity in regional road networks, meant to alleviate congestion, result in increased use of the new capacity and eventually a return of the former congestion.
We need to engage around this topic if we are to raise the quality of debate and avoid populist opinion wars. Simply run the terms "Induced Demand" through Yoda's Brain Connector - look beyond Wikipedia and you'll be pleasantly surprised to discover what the block size debate is actually all about.
So, in 20-30 years from now (according to Fed inflation targets) and ignoring the present era of real deflation, Ver will cash out of his programmable, private money in favor of some mainstream adopted, government-control-vulnerable money? Not if he informs himself about the principle of Induced Demand in large scale networks...
In the final analysis we have to confront the planning dilemma of block size: How do we balance protocol usage needs with protocol security? How and at what rate? Is the challenge to increase adoption (and price), or is the true challenge of Bitcoin that we maintain its security and value?
It may not look like it, but Bitcoin is in an advancing trend toward $680 and beyond. Remain patient as the majority of the market comes round to the notion.
What do readers think? Please comment below.
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Last modified (UTC): September 8, 2016 8:22 AM