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by brendanmc6
1960 days ago
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Totally false. Reduced mining power doesn't reduce the number of blocks being generated. Block mining PoW difficulty increases or decreases based on a running average of past block times[1]. This, given the block size limit, is the very mechanism that caps transaction throughput. Lower prices have always led to less transaction volume which has always made it cheaper and easier to get your own transaction confirmed. "don't invest in something you don't understand", can I ask that you don't spread FUD about something you don't understand? [1] https://bitcoin.org/bitcoin.pdf |
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> a sudden drop in price will mean a sudden drop in mining power, which will mean a sudden drop in blocks being generated, which will mean a sudden drop in throughput
Over time (and blocks) the proof of work difficulty adjusts, but that isn't what I was talking about, which is why I said "sudden" over and over.
It takes the generation of blocks to adjust the proof of work difficulty and if the price goes down, miners shut off and the blocks needed to adjust the proof of work will get generated more slowly. Less blocks on average means the adjustment skews into the future as the throughput goes down.
Two factors that go _against_ a death spiral is that transactions typically go down when the price goes down, and when the transaction throughput is low, people with actual balances on the chain can't get their btc off of it.
When the price goes up and mining power increases (sooner or later) this isn't a problem, because faster blocks aren't a problem - they just make calibrating back down to a 10 minute happen quicker.
> "don't invest in something you don't understand", can I ask that you don't spread FUD about something you don't understand?
Easy there, you can always ask questions instead of making bold assumptions like this.