Ethereum Plunges 20% | Hacker News Reader

Ethereum Plunges 20%

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56 pointsSREinSF24 comments

I think ETH is being pulled down by association with BTC, in the minds of investors.

Bitcoin growth is being stifled by those who will do anything to prevent an increase of blocksize, up from 1MB. We could turn 4MB max blocksize on next week, but the core devs have delayed this simple change for 2.5 years.

When you have 20MB of transactions in the mempool waiting for the next 1MB block, its like 2000 people waiting for a single train carriage .. fees go up and transactions take too long to process. This sets up a low usage equilibrium - people wont use the system as a currency when it takes 3$ to send $300, eventually they give up and go back to paypal, banks or try an altcoin [ Ethereum, Litecoin ]

This change is not a deep complex engineering issue - you _could_ get 10x to 30x transaction volume and several years of rapid user growth on the same linear blockchain by increasing the blocksize on a fixed schedule, well before you hit real architectural scaling issues.

After endless debate we now have all out chaos and civil war in the community, with SegWit/LightningNetwork/blockstream battling against 'BigBlockers', rather than a clear upgrade roadmap all parties can live with.

Politics and greed - and the lack of a benevolent dictator in the core dev team who will make hard engineering decisions - seem to prevent us from having good things, just as Bitcoin is poised to go mainstream.

i keep hearing that the blocksize can be increased without difficulty. But why isn't it? What are the problems you're not saying about doing this?

Both versions of BitCoin would exist concurrently if this change was made. One network would be using 1 MB block sizes (the people who didn't take the update from the devs) and the other group using 4 MB block sizes (the people who updated their wallet/mining rigs).

Unfortunately "most" users want larger block sizes to decrease wait times while "most" miners want block sizes to stay at 1 MB so difficulty is doesn't increase, all their ASICs still work, and so they get more money (IIRC people can pay for fast-lane processing).

If the devs pushed the 4 MB change the miners wouldn't move and because of this no transactions on the 4 MB bitcoin would actually work. If the devs don't push 4 MB then all of the users leave to another coin and bitcoin drops in value.

Talk about rock and a hard place.

I think miners acting in their self interest would realize that a much larger number of transactions with smaller fees would result in a larger total fees profit per block solve.

Almost all of their resources would be the same - the vast majority of their electricity bill is spent solving the block hash compute problem, the resources to actually process the transactions and send them are small compared to that.

The basic logic holds, that you cant make money if nobody uses Bitcoin.

But you can make money if nobody uses Bitcoin. Such is speculation.

for a while at least, yes : ]

The max blocksize is a code constant, so it requires upgrading software on a lot of machines to a version with the fix, which is incompatible with older versions. Called a "hard fork", meaning a fork in the blockchain - because older software would see those new larger blocks as invalid.

The blocksize has been increased in the past, without major upheaval. There is some risk, but staying with outdated software forever also has its own risk.

We should make the single hardfork count - eg. an agreed schedule to increase blocksize over time to keep pace with moores law was proposed as a way to avoid future recurring hardforks.

I think the issue is to manage the risk well - telegraph and explain the roadmap so there is certainty for all parties. Gain consensus, but understand perfect consensus is impossible.

I think the fear is that if you can increase block size from 1MB to 4MB, why not 40MB, or 400 GB. At some point someone will ask:

How big should we make the block so that only big banks with specialized hardware can afford to run the bitcoin network.

My random thoughts on the reason for the plunge:

1) Bitcoin August 1st uncertainty is leading to vast capital outflows from crypto in general.

2) Capital outflows are more significant due to so much dumb money coming in from people who just came in for a fast buck and are now scared.

Obviously nobody knows for sure, but fun to speculate. :)

Dark market crashes. Leading to widespread crashes in the cryptocurrency market as well.

Eth has almost no presence on the dark markets.

Even bitcoin is much much more rare than what people would think by reading the news.

What are the primary coin(s) used on dark markets?

Typically Bitcoin-only, but in the past 1-2yrs Monero (XMR) has gained acceptance in certain large venues. I'm not sure, but I suspect your parent commenter may be referring to the large amount of darknet commerce that does not take place using cryptocurrency?

Plain old cash, including western union, money gram, gift cards and even PayPal. Bitcoin is used more by "bored" western whales and by the Chinese that need to put their money into something the government can't control than by drug or arms dealers.

What Darkmarkets still use cash, western union, PayPal, etc? My understanding is this all died out once bitcoin became a viable currency.

Then again, I guess I'm mostly just thinking of drug-focused markets, not the other kinds... but still. It'd be bizarre if those kept using the payment methods you mentioned.

Also tons of ICOs that are borderline scams flodding the market with Eth when they cashout.

It's basically kickstarter with crypto issue your own worthless tokens which might be used for a future product which might or might no come to any fruition in exchange for Eth, dump the Eth afterwards for cash and profit.

Aren't you forgetting Alphabay being shut down and the founder committing suicide? I am certain lots of people had crypto coins float in Alphabay, which is now just lost. Can't be sold, just lost into the air.

The beauty of the blockchain is that everything is open.

Most of the bitcoins sit in the wallets of rich Americans (or well westerners) and Chinese "investors". The former looks for a cool new investment tool the latter seeks to have global financial influence and a way to get money out of China without ending up in prison for life.

Are you sure the coins in Alphabay are lost? Couldn't the government just sell them off like they did with the coins from Silk Road?

I believe there is a difference between coin seized from the personal accounts and general Alphabay account. Also, this assumes the government has private keys and access.

Asset backed by pure hype crashes. Good numbers on tulip futures though.

Time to buy.

If Bitcoin splits, what happens to altcoins?

If you are talking about independent alt-coins, such as Ethereum and Litecoin, they are completely separate from Bitcoin, and this would have no effect.

If you are talking about tokens on the Bitcoin network, such as MaidSafeCoin, they would also split.

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