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Moore's Law and the Bitcoin Bounty Hunters

Posted 24 August 2017 Moore's Law and the Bitcoin Bounty Hunters
Written by Jon Gulson
Bitcoin and the fiat system are thought to be diametrically opposed, but both currently have one thing in common: growing problems

Bitcoin has grown so fast, the all-consuming scaling consensus hinges around what bitcoin should eventually become and how it should get there. And the fiat system - despite the money printing presses going full tilt – can’t grow at all (except in asset price bubbles) and whose decline could be terminal without fresh impetuous or concept.

This places a bounty on the future of bitcoin and cryptocurrency, which have become some of the best hedges against government monetary policy, currency wars (competitive devaluations) and asset inflation in a low growth world. 

Already, this space is transforming conventional investment thinking and the way we understand money.

So as the bounty hunter roadmaps the capture of his quarry (the future of cryptocurrency), we’ll first understand an axiom of technological evolution: Moore’s Law.

Moore’s Law

This was devised by Intel co-founder Gordon Moore in 1965 to describe exponential improvements in digital technology. Specifically, the number of transistors in a micro-chip doubling every two years or so - and with it computational performance. 

This law followed true until very recently, where it faltered due to the heat being generated by so much silicon circuitry (condensed into a small area). More recently it has been applied to the price of bitcoin, which has doubled every eight months.

According to bitcoin investor and Harvard scientist Denis Porto, Moore’s Law mean’s bitcoin will achieve $100,000 by February 2021. This kind of projection provides an obvious incentive to develop not only bitcoin but other cryptocurrencies. 

Bitcoin rise value

Whilst bitcoin’s price has followed Moore’s Law, bitcoin’s hyper-growth has outpaced it in terms of adoption. As many users reap rewards, these problems have become more than theoretical concerns. 

Scaling the Blockchain

Bitcoin has gone from being an idea to something which has delivered results, with stories of bitcoin millionaires beginning to enter the mainstream.

The issue of scaling the blockchain revolves around decentralization and whether bigger blocks detract from Satoshi’s original vision of a peer-to-peer cash system. The problem has arisen from bitcoin’s popularity growing so quickly and the original one megabyte block size limit creating a bottleneck of delayed transactions and increased fees. 

Proponents of bigger blocks say this is essential for bitcoin to function (as Satoshi originally intended): a quick and cheap way of paying for everyday items; and only with bigger blocks can bitcoin begin to increase adoption and take on Visa as a payment method.

Critics (of bigger blocks) say running a full node (a program validating transactions and blocks on the bitcoin blockchain) becomes more costly and therefore leads to reliance on more centralised services.
For these critics, it is essential bitcoin stays inflation and censorship resistant - and that means more decentralization. This, they say, is bitcoin’s original purpose and we should never lose sight.

These issues have already caused bitcoin to fork on a number of occasions (the first being Namecoin), the most recent being Bitcoin Cash, which works on eight megabyte block size limits.

The strength of bitcoin lays in its first mover status: it is a fully open and permissionless protocol with a number of uses. Longer term, solutions are on the horizon and cheap payments will come with second layer solutions like the Lightening Network. These however require infrastructure and development which take time.

Meanwhile uncertainty will no doubt persist, even as bitcoin gradually increases as a store of value (whether it follows Moore’s Law or exceeds it) and increasing numbers of new entrants begin to realise the potential.

This is because the bounty on offer is more than a fistful of dollars: the reward is digital gold and speculators will drive the price as they place a value on the future of money. And with such an incentive, solutions will find a way.
Written by Jon Gulson
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