- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Payments BitPay, a global bitcoin payment service provider headquartered in Atlanta, Georgia today announced that due to the Bitcoin network currently experiencing a period of rapid growth and seeing all-time highs in bitcoin transactions processed through BitPay they would be raising their minimum invoice amount from $0.04 to $1.00 effective Thursday.With the growth comes rising miner fees and BitPay must make up the fees somewhere.BitPay believes the change will protect consumers from creating un-economical transactions and remove its own risk for processing unprofitable transactions.Merchants who wish to test BitPay’s payment system with smaller amounts can continue to create low-value invoices under $1.00 using BitPay’s fully functioning testnet environment.Since testnet invoices rely on bitcoin addresses from the Bitcoin testnet, they are not subject to the same confirmation times and fee levels as the Bitcoin livenet.

For individuals testing transactions, the BitPay wallet app includes a testnet wallet setting as well.The BitPay team stated: “Now that fees are reaching an average of $1 per transaction across the Bitcoin network, it’s becoming uneconomical for users to make micropayments under $1.” Below you can see a chart of the miner fees BitPay has paid each month over the last year: BitPay CEO Stephen Pair gave more background on the current situation with bitcoin network miner fees in his recent article “The Bitcoin Fee Market.”I've written a paper that argues that it won't.A Simple Macroeconomic Model of BitcoinThe short version is that if you make a few assumptions, it turns out that the price of bitcoin is determined by the chances that bitcoin is spent rather than saved.If bitcoin becomes widely used, then it becomes something of a "hot potato" in which people are rapidly exchanged bitcoin which.doesn't cause the price to increase.The paper was written in 2/2014, and it looks decent a year later.Alexander Hirner has extended this model to argue that increased use of bitcoin will in fact make the price go down7th Etherum Meetup Vienna: Crypto Token Economy - Price of ETH, Bitco…His argument is that lots of people using bitcoin means that there will be fewer "stagnant" bitcoin causes a general price drop.

The world’s most popular cryptocurrency is now worth over $2,000 per coin.bitcoin dorks 2015That’s according to a range of bitcoin exchanges, including Coinbase and Kraken.bitcoin coin splitThat valuation puts the total market cap of bitcoin — the total number of coins in circulation — at $32.92 billion.ethereal trading unionBitcoin has been on a tear this year, as this chart from Coindesk shows.ios bitcoin wallet reviewBitcoin first broke the $1,000 valuation mark way back in 2013, but a combination of factors — including the implosion of then-top exchange Mount Gox — saw the currency drop in value.100 richest bitcoin

Support from financial institutions trialed bitcoin and blockchain-based services, and a general stability following new regulation in China, saw bitcoin return to the $1,000 mark again at the end of last year.bitcoin neon signSince then, its valuation has continued to grow consistently through 2017.When we wrote about bitcoin (and ethereum) hitting all-time highs back at the end of April, you could buy a bitcoin coin for $1,343.Now, some three weeks later, the valuation is up 50 percent.The price of a coin rose 12 percent over the past week alone.But bitcoin isn’t the only cryptocurrency on the rise.Ripple, the centralized currency that is aiming to be a settlement protocol for major banks, has surged more than 10x, or 1000% in under a month making it now the second most valuable cryptocurrency (only behind bitcoin) in circulation.Similarly, ethereum, a cryptocurrency designed to function as a blockchain-based computing platform for developers, is now trading $130 per coin with a total market cap of just under $12B, which represents a a little more than a 2x increase over the last month.

The result of these increases is that bitcoin no longer constitutes the majority of the market cap for all cryptocurrencies.Today the total market cap of bitcoin represents just 47% of total cryptocurrencies – up until a few months ago it consistently hovered around 80%.Why have these other cryptocurrencies been performing so much better than bitcoin?Some say it’s because of bitcoin’s scaling issue.The currency has grown so large that the network is having trouble quickly confirming transactions unless users attach hefty fees for minors.And while the problem can be fixed with solutions like SegWit or Bitcoin Unlimited, the most powerful miners (who effectively control the codebase of bitcoin) haven’t been able to come to a consensus on which new protocol to implement.While increases of 10x in a month would typically be an obvious sign of a bubble, it’s a little different with cryptocurrencies because no one really knows how much they should be worth.Unlike a company there are no assets or revenues we can use to assess a predictable valuation.

So in one sense, a total cryptocurrency market cap of $70B is insane – considering there is no tangible value behind it.But on the other hand, if (any of) these cryptocurrencies actually replace or supplant a global store of value like gold, then $70B is nothing.For example, the total estimated value of all gold mined is around $8.2 trillion USD.Meaning that right now all cryptocurrencies put together don’t even equal 1% of the world’s gold reserves.Similarly, there is currently about $1.5 trillion USD in circulation, meaning that all cryptocurrencies today are still worth less than 5% of USD in circulation.The currency is in unchartered waters at $2,000, but some pundits believe it has the potential to reach $10,000 (or more).To achieve this the community would likely have to sort out the scaling issue, which would give investors confidence that bitcoin’s infrastructure be able to support it as it grows.Despite the news blockade, within a few days of launching Bitcoin XT around 15% of all network nodes were running it, and at least one mining pool had started offering BIP101 voting to miners.That’s when the denial of service attacks started.

The attacks were so large that they disconnected entire regions from the internet:In other cases, entire datacenters were disconnected from the internet until the single XT node inside them was stopped.About a third of the nodes were attacked and removed from the internet in this way.Worse, the mining pool that had been offering BIP101 was also attacked and forced to stop.The message was clear: anyone who supported bigger blocks, or even allowed other people to vote for them, would be assaulted.The attackers are still out there.When Coinbase, months after the launch, announced they had finally lost patience with Core and would run XT, they too were forced offline for a while.Despite the DoS attacks and censorship, XT was gaining momentum.That posed a threat to Core, so a few of its developers decided to organise a series of conferences named “Scaling Bitcoin”: one in August and one in December.The goal, it was claimed, was to reach “consensus” on what should be done.Everyone likes a consensus of experts, don’t they?It was immediately clear to me that people who refused to even talk about raising the limit would not have a change of heart because they attended a conference, and moreover, with the start of the winter growth season there remained only a few months to get the network upgraded.

Wasting those precious months waiting for conferences would put the stability of the entire network at risk.The fact that the first conference actually banned discussion of concrete proposals didn’t help.Unfortunately, this tactic was devastatingly effective.The community fell for it completely.When talking to miners and startups, “we are waiting for Core to raise the limit in December” was one of the most commonly cited reasons for refusing to run XT.They were terrified of any media stories about a community split that might hurt the Bitcoin price and thus, their earnings.Now the last conference has come and gone with no plan to raise the limit, some companies (like Coinbase and BTCC) have woken up to the fact that they got played.Whilst the community was waiting, organic growth added another 100,000 transactions per day.Jeff Garzik and Gavin Andresen, the two of five Bitcoin Core committers who support a block size increase (and the two who have been around the longest), both have a stellar reputation within the community.

They recently wrote a joint article titled “Bitcoin is Being Hot-Wired for Settlement”.Jeff and Gavin are generally softer in their approach than I am.I’m more of a tell-it-like-I-see-it kinda guy, or as Gavin has delicately put it, “honest to a fault”.So the strong language in their joint letter is unusual.They don’t pull any punches:Failing to speak plainly, as they put it, has become more and more common.As an example, the plan Gavin and Jeff refer to was announced at the “Scaling Bitcoin” conferences but doesn’t involve making anything more efficient, and manages an anemic 60% capacity increase only through an accounting trick (not counting some of the bytes in each transaction).It requires making huge changes to nearly every piece of Bitcoin-related software.Instead of doing a simple thing and raising the limit, it chooses to do an incredibly complicated thing that might buy months at most, assuming a huge coordinated effort.One problem with using fees to control congestion is that the fee to get to the front of the queue might change after you made a payment.

Bitcoin Core has a brilliant solution to this problem — allow people to mark their payments as changeable after they’ve been sent, up until they appear in the block chain.The stated intention is to let people adjust the fee paid, but in fact their change also allows people to change the payment to point back to themselves, thus reversing it.At a stroke, this makes using Bitcoin useless for actually buying things, as you’d have to wait for a buyer’s transaction to appear in the block chain … which from now on can take hours rather than minutes, due to the congestion.Core’s reasoning for why this is OK goes like this: it’s no big loss because if you hadn’t been waiting for a block before, there was a theoretical risk of payment fraud, which means you weren’t using Bitcoin properly.Thus, making that risk a 100% certainty doesn’t really change anything.In other words, they don’t recognise that risk management exists and so perceive this change as zero cost.This protocol change will be released with the next version of Core (0.12), so will activate when the miners upgrade.

It was massively condemned by the entire Bitcoin community but the remaining Bitcoin Core developers don’t care what other people think, so the change will happen.If that didn’t convince you Bitcoin has serious problems, nothing will.How many people would think bitcoins are worth hundreds of dollars each when you soon won’t be able to use them in actual shops?Bitcoin has entered exceptionally dangerous waters.Previous crises, like the bankruptcy of Mt Gox, were all to do with the services and companies that sprung up around the ecosystem.But this one is different: it is a crisis of the core system, the block chain itself.More fundamentally, it is a crisis that reflects deep philosophical differences in how people view the world: either as one that should be ruled by a “consensus of experts”, or through ordinary people picking whatever policies make sense to them.Even if a new team was built to replace Bitcoin Core, the problem of mining power being concentrated behind the Great Firewall would remain.

Bitcoin has no future whilst it’s controlled by fewer than 10 people.And there’s no solution in sight for this problem: nobody even has any suggestions.For a community that has always worried about the block chain being taken over by an oppressive government, it is a rich irony.Still, all is not yet lost.Despite everything that has happened, in the past few weeks more members of the community have started picking things up from where I am putting them down.Where making an alternative to Core was once seen as renegade, there are now two more forks vying for attention (Bitcoin Classic and Bitcoin Unlimited).So far they’ve hit the same problems as XT but it’s possible a fresh set of faces could find a way to make progress.There are many talented and energetic people working in the Bitcoin space, and in the past five years I’ve had the pleasure of getting to know many of them.Their entrepreneurial spirit and alternative perspectives on money, economics and politics were fascinating to experience, and despite how it’s all gone down I don’t regret my time with the project.