Topic: Does miners switched off = liquidity issue? (Read 930 times)

It would certainly be interesting to see it play out. Maybe that's one of the goals of this constant price pressure. Root out the big centralized farms and stress test the system? /tinfoilhat

You are wrong. If the hash rate halved, the blocks would be discovered around every 20 minutes. And the retargeting would happen after 2016 blocks or 28 days.
50400 coins would be mined in 28 days instead of 14, so there would be 25200 less coins mined in 28 days.
Apart the need to wait around 20 minutes to get a block, the network would work without problems as the mean size of a block would rise from 400KB today to 800KB in this case (supposing the same number of transactions happen). This would be dangerously near to the limit of the block size, but increasing it would be pretty easy and fast, as the current limit to 1 MB is artificial.

If the hash rate would fall 95% it would be a problem for a long time (like 40 weeks), but the same 50400 coins would be mined in 280 days instead of 14. Inflation would halt near completely and the price would be pushed up for lack of new bitcoins hitting the market. In the same 40 weeks, normally, there would be little more than 1M bitcoins mined, but instead just 50400 would be. Inflation would drop from 9.49%/year today (weekly projection) to 0.4745%/year. The main problem would be a block would be mined every 200 minutes and there would not be room enough for all transactions. Surely the commission to get a transaction in the block would raise a lot (no microtransactions or free transactions baby). But 40 weeks are a lot of time and I do not think Gavin Andresen would need more than 4 weeks to get out with a fix increasing the the block size directly to 32 MB (the current maximum with all limits removed) and this would be enough to make room to all transactions. And with 32 MB blocks the only nuisance would be the 3 hours and 20 minutes (very variable) needed to find a block. Bitcoin confirmations would not be slower than Credit Card confirmations even in this case (even if the block is found after one and half day).

BTW, a 95% reduction of the hash rate would cause the remaining miners to get 20x revenues than before and they would be a lot more profitable.

In my opinion, if this happened, bitcoin would be able to adapt and, as result, a lot of people would invest in it given its resilience.

transactions been slow today

Perfect. Thank you!

I don't panic. Nor should anyone prone to do so play with something like bitcoin. Go in knowing what you are dealing with or suffer the consequences.

Buying or selling in an emotional state is the best way to lose money.

This... it would recalculate in 2 weeks utter max.

Even if the hash rate dropped 95% and transactions took hours in 2 weeks utter max it would be back to 10 minutes..

I suppose you coud shut your stuff down kill the hash rate, let the difficulty drop then turn it back on and mine a crazy amount of blocks.  That is a different topic though.

That could be the longest 20 minutes of your life in a panic situation.

difficulty only adjust every 14 days - now hashrate drops out. So the miners left have a harder time solving blocks so it takes longer.

Assuming price drops further and hash drops with it it will always take longer for blocks to solve. There is a slim chance that in case hash goes out too fast blocks become so hard to solve transactions could take hours. Total trafficjam on the blockchain. Sends price and hash down. Domino-style. In the end blocks are so hard to solve the next difficulty adjustement can't be reached wth the remaining hash. And that's the end of it. Error 404 not found

read this:
https://bitcointalksearch.org/topic/hypothetical-price-collapse-and-massive-farms-failure-912190

not saying it does happen but it is a real possibility and we can discuss it. Certainly possible. In case it does happen: do not dump your coins for fiat - it will be too late - buy altcoins instead.

People playing this scenario down or denying it should not be taken serious.

If half the network suddenly drops confirmations will take 20 minutes instead of 10 for a few weeks, then back to 10 again. That's it. Next problem.

The 2011 price slide led to months of difficulty drops, and no operational issues for the network as whole.

Bitcoin is dynamic. The mining shock would have to be very sudden and very large in order to cause a real operational problem; ie, a problem that a 2016 block adjustment wouldn't handle.

Note that it's dynamically adjusting on both sides. When difficulty was rising exponentially, was anyone worrying about block times becoming seconds and orphaned blocks killing the network? No (at least, not rational people); avg blocktime was something like 7mins throughout the exponential ramp. If miners drop equally fast, we'll see 13-14min avg block times for a while.

Interesting.

Briefly (if you can), why does the average transaction time go up?

I agree about Bitcoin now being "old tech". The steam engine is also old technology - but it's technology that got us to where we are today. We should cherish and look back on steam with nostalgic admiration. We shouldn't try to transport the global population on steam. Keeping that old technology would be madness.

Perhaps this could mean the end of all those "get rich quick" mining schemes...

yes, pull the whool over your eyes and say "everything is fine - always"

No, in fact with hashrate drop blocks become slower. Now at 14 minutes per block. (https://blockchain.info/de/stats) A liquidity issue is a real concern. Further selloff could occure, beating hashrate down further. Since bitcoin is old tech it adjusts difficulty slow so network could come to a halt and price could plummet to zero before you know it.

So i think there is reason for at least some concern.

Altcoins will be unaffected (don't know about the merged mined ones)

Massive hashrate drop is a first time for bitcoin. So we are making history wwwoooohhhhoooooo!

Litecoin to the moon mofos! Bitcoin to the floor.

it could happen in theory because difficulty changes every 2016 blocks (around 2 weeks).
so if we assume that a great amount of miners are switching off at the same time then block generation will take longer then 10 minutes -> transaction will take longer.

but to be honest it's rather a unlikely case

i dont think the transaction will take more time because the difficulty can be decreased what would lead to faster block mining

As miners are being switched off, I presume the cost and time of doing a transaction increases?

What happens if a large % of BTC holders all want to process their transactions at the same time (e.g. in the event of a bank run)?