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This Awful Bitcoin Stat Guarantees It’s Not Crypto’s Future: Mathematician

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By CCN: With all the hype about blockchains and their many uses, we shouldn’t forget the original purpose for the Bitcoin blockchain and Nakamoto’s great leap forward.

Blockchains and cryptocurrencies were created to be decentralized currencies, replacing or complementing fiat currencies. For the most avid crypto fans, crypto is the future of currency and will eventually handle full-scale economies. We dream of the day that we laugh and tell our kids and grandkids that we had physical wallets, paper currencies, and things called “credit cards” (“Grandpa, seriously, you are so old!”).

Preparing the Crypto Economy for Mass Adoption

So what has to happen in order for us to run economies on the blockchain?

There are several hurdles we still need to clear, like getting the value of these currencies to be stable, handling privacy in a sensible way, and getting confirmation speeds fast enough for point-of-sale transactions.

By far the most glaring hurdle, however, is throughput. We need to be able to handle many, many more transactions per second than any current blockchain is capable of. At 13 transactions per second (a high estimate), Bitcoin can handle just over a million transactions per day. For niche, small economies, this might do the trick. But it certainly won’t do it for, say, the US economy.

Let’s put this into perspective. In 2017, the US gross domestic product (GDP) was almost $20 trillion. GDP isn’t a great measure of how much money changes hands during the year, but for our purposes, it’s close enough. If about $20 trillion changed hands in the US in 2017, then about $54 billion changed hands every day (20 trillion divided by 365). Ignoring how slowly Bitcoin processes transactions, if it were to handle $54 billion in transactions in one day, transactions would have to be on average about $54,000 (54 billion divided by 1 million).

What? Your everyday transactions aren’t $54,000 on average? Of course not. Between 2012 and 2017, US consumers spent roughly $80 per transaction online.

bitcoin is bad for payments

Bitcoin doesn’t look like a candidate to replace credit cards in the online payments realm. | Source: Statista

In 2016, transactions on Amex credit cards averaged about $141, and those on Visa averaged about $80. While it is true that corporations tend to transact in higher dollar amounts, it’s still likely that the crypto community is still a few orders of magnitude away from being able to handle all the transactions in an economy on a single blockchain.

If, based on the statistics I just gave, we assume that transactions are about $100 on average, then $54 billion would change hands every day in roughly 540 million transactions (54 billion divided by 100). That boils down to about 6,000 transactions per second on average. If we take into account the fact that most people transact during the day, a quick recalculation yields about 10,000 transactions in an average daytime second (instead of dividing by 24 hours of the day, divide by 16 to account for about 8 hours of sleep).

This estimate is probably about right. There are roughly 324 million people in the United States, and about 5 million businesses. If we assume that people and businesses, on average, transact 1.5 times per day, then we have about 500 million transactions per day (329 million entities multiplied by 1.5). This is close to our estimate of 540 million daily transactions from before, which gives about 10,000 transactions per daytime second in the United States.

Bitcoin Would Need to Increase Transaction Capacity By Four Orders of Magnitude to Replace Visa

Mastercard, Visa, Bitcoin

With Bitcoin’s staggeringly-limited transaction capacity, it’s unrealistic to believe it can rival Visa or Mastercard – much less both. | Source: Shutterstock

Getting back to the original question, how many transactions per second does a blockchain have to be able to handle in order to support the United States economy? Our rough calculation of 10,000 transactions per second is almost certainly not enough, but it does give a base from which we can work. To give perspective, Visa processes about 1,700 transactions per second on average but at peak times it can handle up to about 24,000 transactions per second. Their max limit is just over an order of magnitude higher than the average, in order to handle high-volume days like Black Friday or the post-Christmas wave of returns.

Taking Visa’s data as an example, since 10,000 transactions per second is our rough estimate for the average, we’d probably need to be able to handle around 100,000 transactions per second to really kill it (one order of magnitude higher than the average, similar to Visa). That’s a lot. More precisely, that’s about 10,000 times faster than Bitcoin—a whopping difference of four orders of magnitude.

To me, this says that our methods of finding consensus on a blockchain are simply not fast or powerful enough to actually use crypto as a viable currency. We need innovations in infrastructure, hardware, and consensus algorithms in order to even hope to reach this threshold.

Bitcoin Is Not the Future of Crypto

bitcoin

Derek Sorensen believes Bitcoin is definitely not the future of crypto. | Source: Shutterstock

That is to say that, barring some major changes and improvements, Bitcoin is almost certainly not the future of crypto.

Technologies like the Lightning Network attempt to solve the scalability problem, but do so awkwardly and ineffectively. Opening channels to transact off-chain ties up money in extremely inconvenient ways. In practice it incentivizes users to open a single channel with a centralized liquidity provider on the blockchain, rather than opening many channels. This effectively creates unregulated, centralized banks, and in my view goes against the core principles of blockchain technology. Even worse, because transactions are done off-chain and channel data can’t be deterministically rebuilt, if a Lightning node crashes, both parties can easily lose funds. It may genuinely be one of the worst ideas in cryptocurrency.

Notwithstanding, the blockchains of the future may not be so far off. New research in math shows promising results in the mathematical foundations of consensus that could produce blockchains with 50,000 transactions per second or more without compromising safety or decentralization. Every day, a new paper comes out or a crypto startup launches a new product.

There are plenty of bright minds working on securing the crypto dream. I guess in twenty years if you’re paying for your groceries with crypto you’ll know that we succeeded.

About the Author: Derek Sorensen, Pyrofex Research Mathematician, has an MSc in Mathematics and Computer Science from the University of Oxford and is set to start his PhD this fall at the University of Cambridge, where he will study logic and topology. His work at Pyrofex is in formal verification, which includes research on the theory of consensus and setting up mathematical frameworks to prove theorems about code.

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NEO Price Prediction: Long-term (NEO) Value Forecast – May 19

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  • NEO/USD still in a bullish trend outlook in spite of a notable line of declines in its market valuation.
  • The two SMAs have now formed together to define the NEO/USD trade’s movements to the north direction.

NEO/USD Long-term Trend – Bullish

  • Distribution territories: $16, $18, $20
  • Accumulation territories: $8, $6, $4

In spite of a notable decline that occurred between May 16 and 18 in the NEO/USD market valuation, the crypto-pair’s trend is yet in a bullish outlook. After a slight kind of erratic price movements in the crypto-trade on May 13, the market eventually got push to test a price value at $14 mark on May 16.

Shortly, the crypto-trade began to make a retracement move to touch the two SMAs at their touching point located a bit over $10 horizontal line. Presently, the crypto has been seemingly striving once again to regain its momentum around the touching location of the 14-day SMA and the 50-day SMA indicators. The Stochastic Oscillators are now attempting to close hairs at range 60.

Most of the trading indicators still point to the north to suggest that the bulls are in control of this crypto-market. The two trading SMAs have slightly joined together at a point a bit over $10 mark to seemingly end the correction from a high value at $14 mark. Therefore, the market is now expected to surge northwards further past its aforementioned high point.

The views and opinions expressed here do not reflect that of BitcoinExchangeGuide.com and do not constitute financial advice. Always do your own research.

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Bitcoin and Blockchain: The Tangled History of Two Tech Buzzwords

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“I’m interested in blockchain, not bitcoin.”

Admit it, you’ve heard this hundreds, if not thousands, of times. (You might have even said it yourself.) And sure, people know what you’re saying, you’re talking about the “technology underlying bitcoin” and you sound smart enough.

Once it became known – or at least presumed – that you could apply cryptography in finance, in ways similar to how it’s used in bitcoin, everyone started making sure that statement fell from their lips. And that refrain – kicked off by bitcoin itself – remains powerful today.

Sounds plausible? Sure. But, interestingly, the word “blockchain” doesn’t actually appear in the original bitcoin white paper, released back in 2008. Rather, the white paper uses the words “block” and “chain” separately many times.

It describes the word “block” as the vehicle for a bundle bitcoin transactions. Then, these blocks of are linked together, forming a “chain” of “blocks.”

bitcoin, paper

Snapshot from the bitcoin whitepaper (highlighting added)

So, who created this ultimate industry buzzword?

That damn blockchain

Turns out, the origins of the word are not quite so revolutionary.

“The word blockchain was never used in the early days,” former bitcoin developer Mike Hearn told CoinDesk. Although, Hearn did acknowledge that Satoshi often referred to bitcoin’s “proof-of-work chain” in discussions on forums.

It seems the first references to the word came about on Bitcoin Talk, a bitcoin-specific forum created by Satoshi, in July 2010 – more than a year after bitcoin’s release.

And at that time, these remarks weren’t about how innovative the technology was, but instead were complaints about how long it took to download the bitcoin “blockchain” (the entire history of bitcoin transactions).

While compared to today, the download would have far faster, according to one Bitcoin Talk user: “The initial blockchain download is quite slow.”

In other words, initially, blockchain was far from the sexy word it is today.

Blockchain mania

It’s hard to pinpoint exactly when the word really took hold.

But interest in the term seems to have sprung out of professional organizations and individuals hesitance to align themselves with bitcoin itself because of its bad reputation as the currency for drugs and gray economies.

“I think it [became popular] around the time people started going to Washington [D.C.] and trying to make bitcoin respectable by divorcing the currency from the underlying algorithms,” Hearn said.

To many, bitcoin the currency could be decoupled from bitcoin the blockchain protocol, and so a whole new industry of so-called “private blockchains,” devoid of a cryptocurrency, emerged. Sure enough, around that time in 2015, Google Trends data show the term surged.

Graph from Google Trends.

“Initially people said ‘block chain’, and then, thanks to a great PR campaign, we were blessed with the much improved ‘blockchain,’ single-word, probably thanks to a community-wide effort near and around the Bitcoin Talk forums,” long-time cryptocurrency developer Greg Slepak said.

Not only did it become one word, but it also came in vogue to describe any blockchain that wasn’t bitcoin’s blockchain as “a blockchain.” Bitcoin got to keep the terminology “the blockchain,” giving credence to the fact that it was the first.

Yet blockchain has become so divorced from bitcoin that both words typically see a similar spike when cryptocurrency prices start mooning. For instance, the word blockchain saw a huge uptick in Google searches in late 2017.

blockchain, google trends

Graph from Google Trends.

World’s first blockchain?

Still, it’s unclear exactly where the idea itself begins. To some, blockchains existed even before bitcoin, although that term wasn’t applied to them back then.

For instance, cryptographer Stuart Haber, whose whitepapers on timestamping were cited in the bitcoin white paper, claims to have created the first blockchain called Surety.

According to Haber, that has to be the reason why Satoshi cited his work – three times out of just nine total citations. Surety was launched in 1995 for timestamping records, and it’s still running today.

Yet, Haber admits that his version doesn’t have all the same benefits of bitcoin since it’s centralized – managed by one company.

And that highlights where things get tricky when you’re talking about a blockchain. See, there isn’t necessarily agreement on a single definition of a the technology.

The Merriam Webster dictionary actually presents a much older word for blockchain – “a chain in which the alternate links are broad blocks connected by thin side links pivoted to the ends of the blocks, used with sprocket wheels to transmit power, as in a bicycle.”

While Google defines blockchain as:

Google, blockchain

But, for those seasoned veterans of the space, even this definition is problematic. Many of these new-age private blockchains don’t record their transactions publicly.

“The term has become so widespread that it’s quickly losing meaning,” as The Verge put it earlier this year.

Blind men

Haber pointed to an Indian parable to help explain the incompatible descriptions.

In the parable, a group of blind men come upon an elephant and start touching the animal to try and figure it out what it was in front of them.

Depending on what part of the elephant each man is touching, their answer changes. For instance, one of the blind men, touching the elephant’s trunk, thinks it’s a snake, while the other, touching the elephant’s leg, exclaims it’s a tree trunk.

It’s similar when people define blockchain, Haber said.

He told CoinDesk:

“Some definitions will be completely silly, showing that people don’t understand what they’re doing, but there will also be a bunch of accurate descriptions of various parts of the vast body of work.”

As such, he argues there isn’t just one meaning.

Even though, bitcoiners believe a blockchain can only be the one and only bitcoin blockchain, like words, definitions are always evolving and changing.

Blockchain shirt image via CoinDesk archives

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Bitcoin Pizza Guy featured on Anderson Cooper’s 60 Minutes

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The beloved “Bitcoin Pizza Guy,” Laszlo Hanyecz, will be featured in the next airing of 60 Minutes where he will explain how he spent almost $800 million on pizza. Set to air on Sunday, it will be the first TV interview Hanyecz has ever given and will help bring Bitcoin to a much wider audience.

Bitcoin Pizza Guy to give the first interview on the 9th anniversary of Bitcoin Pizza Day

A computer programmer from Florida has been featured on 60 Minutes and the crypto industry has gone crazy. Set to air on Sunday, May 19th at 7 pm ET, the report has left many people wondering what the fuss is all about.

The Bitcoin Pizza is Worth $83 Million Today

Related: The Bitcoin Pizza is Worth $83 Million Today

The programmer in question is no other than Laszlo Hanyecz, the Bitcoin Pizza Guy, a legendary figure in the crypto industry. Hanyecz made history as being the first person to conduct a real-world transaction involving Bitcoin. However, a few years later, he also became known for spending a total of 100,000 BTC mostly on pizza when Bitcoin was worth less than 1 cent.

At the time of the interview, one Bitcoin was worth around $8000, which means Hanyecz spent $800 million worth of BTC on pizza. In the interview snippet, Anderson Cooper, the new host of 60 Minutes, looked flabbergasted, to say the least.

“Are there nights you wake up,” Cooper asks, “where you think, ‘I could have had $800 million… if I hadn’t bought those pizzas?’”

Hanyecz says:

“I think thinking like that is… not really good for me.”

60 Minutes brings more media attention to Bitcoin…and pizza?

Tomorrow’s 60 Minutes will be focused on cryptocurrencies and the ways they have shaped the world. Hanyecz isn’t the only well-known figure in the crypto industry that will be featured in the show – Lael Brainard, the US Federal Reserve Governor, Neha Narula, director of the MIT Media Lab’s Digital Currency Initiative, and Marco Streng, the CEO of Genesis Mining are all interviewed as well.

Charlie Shrem, BitInstant founder and the first person to become convicted for crypto fraud, also makes an appearance.

While the report has caused quite a media frenzy among the crypto community, it put cryptocurrencies under the spotlight. Having a network like CBS focus on the industry so much will definitely increase interest in Bitcoin.

As May 22nd, the 9th anniversary of Bitcoin Pizza Day is getting nearer, it seems that pizza is also getting more media attention. Charlie Bilello, a cryptocurrency writer and investor, recently pointed out an interesting fact. Domino’s Pizza, which went public in July 2004, has a return of almost 4,200 percent.

Google, one of the largest companies in the world, went public a month later, in August 2004. Its investors, however, have only seen a return of 2,228 percent so far.

Many attribute the incredible ROI Domino’s has seen to the new and improved business model implemented by its retired CEO, Patrick Doyle. Others have also pointed out that Domino’s switch from a restaurant to a tech company, alongside its implementation of crypto payments, is what created the most value for investors.

Watch the interview with Laszlo Hanyecz below:

[embedded content]

Filed Under: Adoption, Bitcoin, People of Blockchain

Priyeshu Garg

Priyeshu is a software engineer who is passionate about machine learning and blockchain technology. He holds an engineering degree in Computer Science Engineering and is a passionate economist. He built his first digital marketing startup when he was a teenager, and worked with multiple Fortune 500 companies along with smaller firms. When he is not solving the transportation problems at his company, he can be found writing about the blockchain or roller skating with his friends.

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Disclaimer: Our writers’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.

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Binance Coin Price Prediction: Long-term (BNB) Value Forecast – May 19

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  • BNB/USD trade has been on a slow and steady upswing over time until now.
  • The BNB/USD market may experience a line of variant correction around $32 and $28 price points, and that could result in range market movements.

BNB/USD Long-term Trend – Bullish

  • Distribution territories: $40, $42, $46
  • Accumulation territories: $16, $12, $8

Binance Coin market has been on a slow and steady increase as paired with the US dollar price valuation. On May 9, the crypto-trade declined slightly past the trend-line of the 50-day SMA indicator to record a low point around $20 mark.

On the succeeding trading day, May 10, the crypto notably made a weak come-back, and that has now featured as its actual turning point for its current visible upswing in the market to touch a high mark at $32 over the 14-day SMA’s trend-line. The 50-day SMA is situated underneath the 14-day SMA with a small space between them. The Stochastic Oscillators are now seemingly attempting to close hairs around range 80.

Observantly, the BNB/USD trade has been swinging upward mostly at the touch of its 14-day SMA’s trend-line from the top. Equally, The BNB/USD market may experience a line of variant correction around $32 and $28 price points, and that could give in to seeing other range market movements around those trading zones.

The views and opinions expressed here do not reflect that of BitcoinExchangeGuide.com and do not constitute financial advice. Always do your own research.

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Bitcoin Price Analysis: BTC Surges $800 Back To $8K – A New 2019 High Soon?

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Corrections are part of the game. Two days ago, when publishing our recent analysis, we saw Bitcoin correcting violently down, even touching $6300 on some exchanges. This was anticipated following the surge from $5000 that went only in one direction.

If someone is looking for strength in the BTC market, he would definitely find it at recent hours’ Bitcoin behavior. The volatile coin had gone through a fabulous $800 bullish run, and now testing $8000 again.

Lastly, and not for the first time, this is for sure Bitcoin’s favorite TV show:

btc_bart_may19_v-min

Total Market Cap: $249 Billion

Bitcoin Market Cap: $140.9 Billion

BTC Dominance: 56.6%

Looking at the 1-day & 4-hour charts

– Support/Resistance:
From above, Bitcoin is now facing the $8000 resistance again. If Bitcoin succeeds in breaking, we would expect a retest of $8200 and 2019 high at $8400. Breaking up and $8500, $8800 and $9000 will become the next targets for the cryptocurrency.

From below, after the $7000 and $7250 – $7300 had proven to be strong support area, from below there is also the $7800 and $7600 support levels before reaching to the mentioned area.

– Trading Volume: The recent days had seen very high volume (and high volatility). The daily volume levels are starting to look like December 2018 numbers.

– Daily chart’s RSI: The RSI had also encountered a resistance zone of 70 – 73. However, a bullish sign might be coming from the Stochastic RSI oscillator. The last is moving toward a crossover in the oversold area; this can fuel up the market and assist in breaking up the $8000.

– BitFinex open short positions: Following the severe 40% drop of the short positions and the long squeeze, the shorts are slowly climbing and now stand on 17.6K BTC open short positions.

BTC/USD BitStamp 4-Hour Chart

btc_may19_4h-min

BTC/USD BitStamp 1-Day Chart

btc_may19_d-min

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