1/8 About that mining death spiral thing. Clearly the mainstream media are being alarmist, as they often are, but...
That does not mean there isn't a real risk worth serious investigation. There is, and you might be interested in this old discussion: bitcointalk.org/index.php?topi…
That does not mean there isn't a real risk worth serious investigation. There is, and you might be interested in this old discussion: bitcointalk.org/index.php?topi…
2/8 The root problem has to do with the fact that the difficulty retarget algorithm in Bitcoin is terrible, as I've described at .
3/8 If hashrate drops suddenly (which can happen for any number of reasons), the difficulty doesn't automagically adjust - it can take up to 2016 blocks for that. But since hashrate has dropped, 2016 blocks are now potentially much more than 2 weeks.
4/8 So that could mean a long time with very slow blocks, which could aggravate the existing issues. E.g. if the price has dropped, there can now be panic (justified or not) and a further drop in price, leading to an even further drop in hashrate, and so on in a cycle.
5/8 A mitigating factor might be rising fees as people fight over the scarce blocks. But if we're in a spiral and the value of coins has dropped, people might lose interest in their coins and moving them, or not have enough value to sponsor the struggling mining industry.
6/8 Miners or other stakeholders might mine at a loss until balance is restored. But there are coordination issues and tragedy of the commons. By the time people assemble to rescue the network, they might no longer have much of a stake to protect.
7/8 The most promising remedy is a hard fork to artificially reduce the difficulty. But that's not completely satisfying, given the resistance to hard forks in the past - both the fact that there is resistance, and the fact that there are good reasons to resist.
8/8 In conclusion: No need to panic, but don't dismiss this as the latest nocoiner FUD fad. It's not a new fad, and it wasn't originally suggested by nocoiners.
