- Bitcoin continues to trade around the level of USD 8,550
- Miners prepare for the next Bitcoin block reward halving event as March begins
- Centralization certainly not the way forward as blockchain industry prepares for next wave of adoption
Bitcoin prices continue to seek some validation of theories on Sunday, but until some of the volatility ceases and prices remain in range for several days to a week at once, we won’t be able to press for a certain direction for the medium term. As it stands Bitcoin is currently trading at a price of around USD 8,550 (CoinDesk).
In any event, if Sunday is not working out for speculators, we can always rely on development-related news to take a possible peek at the future for blockchain.
Now that we’re in March, we are only two months away from the very much anticipated block reward halving for the Bitcoin network, meaning to say new Bitcoin entering the circulation will be halved from 12.5 BTC to just 6.25 BTC.
It’s a big scarcity factor in an already scarcity-focused system, and most analysts agree that this will certainly lead to an increased valuation of Bitcoin in US dollars. The question is, are miners, who are set to be the most affected of all, prepared for the event?
The first and most obvious truth for miners is that, profits are instantly cut in half. So this means, if profit margins are small for miners today, they will almost certainly be wiped out when halving occurs, causing their operations to run at a loss.
Of course, what exactly is the break-even price for miners will vary from location. Estimates are also thought to be rather skewed towards miners who aren’t prepared to disclose just how much profits they are making. But assuming that profit margins are NOT at 100%, then it is safe to say that after halving, Miners will be forced to either upgrade their computers to mine at twice the rate they are currently, or halve the expenses. In fact, for many, if the truth really is that profit margins are low, will be forced to shut down operations entirely.
Analysis suggests that miners have long been prepared. Even at BitcoinNews.com we have reported on mining companies expanding in 2020 or upgrading to newer, faster and more efficient equipment. Bitmain, for example, already rolled out 200,000 new units last summer and should have much more coming in the pipeline.
In any case, the mining industry aside, we should always be prepared for any kind of progress, and with the next wave of blockchain adoption due any time soon, companies and users should be prepared.
Technically, economically and even politically, blockchain implementations in cryptocurrency were designed first by Bitcoin to be decentralized, that is, not under the control of any single entity. The whole concept of a currency or asset or even network that is built around public consensus ensures mutual benefit and prevents power in the hands of the few.
But with the majority of companies and new projects coming up since Bitcoin being centralized — if not in architecture, at least in governance and management, to mention the likes of Ripple, Ethereum (at the beginning) and EOS, is the future of blockchain in jeopardy?
For now, Bitcoin and Ethereum hold sway over the entire market and dominate the cryptosphere, but it is precisely because they are decentralized — also acknowledged by the US government — that they have been so successful.
For consumers too, Ethereum is going to be a big interest for developers because ETH 2.0 will be rolled out soon with better support for decentralized applications (Dapps), that many still believe will provide the killer value the industry has been waiting for.
Meanwhile, the deeper question remains about mining. Bitcoin’s Proof-of-Work algorithm currently ensures decentralization but as Ethereum moves to Proof of Stake, many see it as a trade off, giving away some decentralization to solve scalability issues, and thus compromising network security. This is because those with the largest funds can cheaply stake to mine even more.
Rest assured, developments will continue to take place and public interest and mutual benefit will continue to be the core, but it is for sure that centralization can never be the way forward.
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