The bitcoin value drops to $8,000, less than half of what it was 6 months ago, despite the optimistic predictions of various criptocurrency lawyers who are sure to raise bitcoin to odds they have not seen before. Will bitcoin rise (out of the ash) on new highs?
In the previous article, we talked about Fundstrat's forecast that we will have a $36,000 bitcoin by the end of 2019 (based on the cost of mining a new unit).
But this method of analysis is criticized by many: for example, Samson Mow, director of Blockstream's strategy department, points out that Fundstrat is based on a controversial economic theory: the price theory given by the cost of labor for its production, which is popular among Marxists economists, but rejected by most experts who are adept at subjective value - the value of a good is given by the amount of money that buyers are willing to pay.
In fact, things are a little more complicated - if the cost of production gets bigger than the price of the buyers, the producers will give up producing that good, so there will be lower market offer and the demand will have to give more money => more goods will be produced and so on...
How does this process apply to a cryptocurrency? - When the mining cost becomes too high, the miners will give up and then the currency will be more vulnerable to blockchain attacks. To prevent this possibility, bitcoin applies the following measure: if the number of miners decreases, the algorithm becomes less difficult and thus decreases mining costs, more miners are attracted, etc.
This means that the criteria taken into account by the Fundstrater are more than a simple valuation of the currency after the cost of obtaining a mining unit. There is certainly a correlation between this cost and the market price of bitcoin. But this trend will manifest itself fairly if there are no other factors influencing the market - and in bitcoin it is obvious that even an announcement, for example introducing a regulation, can have a huge effect on the price.
In other words - if bitcoin had allowed it to evolve without intervening (by governments or financial regulators), the price would certainly increase as predicted. But we know almost certainly there are and there will be external interventions.
Bitcoin still has a problem - if there are too few miners, it will be in danger of disappearing altogether. Why? - because miners are not just looking for new blocks, they also check transactions. Without this verification, the currency can not be bought, sold, or spent. If the mining return reaches zero, there will also be the bitcoin (it will not have any value because there will be no more transactions).
Everything is in a balance that must not be ruined: there are miners to make profits, there are transactions that generate profits for miners (through trading commissions), the level of difficulty can be adjusted correctly so that the balance is kept. Any major disturbance can irreparably destroy the system.
Ultimately, the bit rate value is given by how many transactions are made (this also includes buying / selling the currency). Bitcoin must remain attractive for people to continue wanting to do business - a spiral of death in which the price will drop dramatically and people will give up an ever larger number is possible, which will lead (through the lack of miners) to total collapse of cryptocurrency.
This is a translation of an article I have read recently. It seems to me quite true.
It is one of the reasons why I believe that crypto-coins exclusively based on Proof-of-Work algo will not have a brilliant future, and the market will increasingly be captured by modern, hybrid altcoins, based on both Proof-of-Work and Proof-of-Stake, which will not depend exclusively on the presence of miners in the scene.
VirtacoinPlus will have a hard word to say in the distant future. People will realize this superb quality of this coin not to be dependent on miners and will adopt it more and more.
Every time I find an extra penny in my pocket, I buy XVP. The future will prove to me whether or not I was right.
https://youtu.be/m1ZG5B5p7MUhttps://youtu.be/GiHTy_wxhgs