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Author Topic: Can a big dump render Bitcoin unusable because of the mining difficulty?  (Read 128 times)
p_a_l_o_f
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November 27, 2019, 07:25:39 AM
Merited by hugeblack (1), Heisenberg_Hunter (1)
 #1

Hi, I have this theoretical question.

What is a probability or feasibility of this scenario - Imagine that somehow dumps a large enough amount of BTC, so the BTC price goes 90-95% down *before* the next mining difficulty adjustment happens. Because of the price dump many miners will turn off their machines - still before the next difficulty adjustment, so the mining process slows down greatly, so let's say 1 block per day - which could take the price down even further, causing massive panic, etc...which could result either in BTC nuclear winter or the whole crypto nuclear winter or BTC being replaced by something else?

What are the competent opinions on this? I believe this question probably has already been discussed, so apologize for that, I just could not find anywhere :/

A follow up question would be - why is the mining difficulty adjusted after each 2016 blocks? Wouldn't it be better to adjust it like - 2016 blocks or two weeks, whichever comes earlier? Would not this make the whole network more robust against such possible attacks?

Thanks! Smiley
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November 27, 2019, 01:10:31 PM
Merited by frodocooper (3), Heisenberg_Hunter (1)
 #2

Being robust against that attack is less of a concern than against other types of attacks. You'd need a massive cartel of people heavily invested in BTC in order to collect enough coin to drop the price that far, and it's likely that, in an economy driven largely by greed, you wouldn't be able to find that many big players interested in getting such a lousy return on prior investments of capital or mining efforts.

Dropping to 1 block per day would mean a 99.3% drop in global hashrate. Diff tends to follow price, but when prices drop diff drops at most half as far, probably on account of all the industrial low-cost-power miners who can ride out drops better than home users and poor planners. If a 95% drop in price were to happen, the short-term effect should only be a roughly 50% reduction in hashrate, for 72-block days, at least for a time. Even the big industrial miners would have to operate out of pocket while hoping for coins to rebound. If the price didn't come back up soon, then we could have trouble, but it wouldn't land all at once.

The guys who bought in that massive dump at low prices will also be hoping for coins to rebound, and possibly wrangling their own cartels of manipulators to pull off some token large buys in order to swing the price upward.

In the meantime, Bitmain might use the opening to push one of their crappy forks, so it's possible an alternative would gain a bit of traction, but most of the alternative options have the same susceptibilities.

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November 27, 2019, 11:04:11 PM
 #3


If BTC price dips that much in such a short period of time, it will be unusable for that exact same reason, not because of mining or anything else, every bear market that bitcoin had took months to actually hit 85% drop max , it took 400 days in 2013-2014 and 363 days in 2018 only to hit an average of 85% drop, and then it takes months or sometimes even years before people start trusting bitcoin again, some actually leave for good and never come back.

but with all honesty if bitcoin falls to 750$  tomorrow or even in a course of say 2-3 months (90% drop from where we at right now) , it's very likely that bitcoin will be considered unusable by most investors out there, and there will be no buyers to lift price back up.

with that being said, I see no reason why does 2016 blocks adjustment can't be changed, newer difficulty adjustments algorithms have been implemented and tested on other coins, they might work just fine on bitcoin , but this is no where near top priority now, scaling layer 2 seems to be the only thing that matters now, and when the time comes , i do expect a tweak in the difficulty adjustment protocol.

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November 28, 2019, 10:14:48 PM
 #4

   So if btc adds an emergency adjustment in case of 90% hashrate drop causing a 100 day wait for new adjustment. Problem is solved.  So dropping hashrate due to a huge price drop could be fixed. I don't worry that will happen until 2024 1/2 ing.   Could happen then.
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November 28, 2019, 10:29:58 PM
 #5

People and businesses don't react that quickly, for this to be any sort of a catastrophic even it would need to crash at the beginning of an adjustment period. Even then a large portion of the Global hashrate is split between a few companies and businesses with a large vested interest in BTC carrying on through any hiccup.
If it runs slower for 8 days and comes out successful it can be claimed as a win for weathering the storm. Could someone try and push a Fork that's running or a new one at that time definitely but that would be a massive disruption far worse than a large drop in hashrate. If people where concerned about this they would likely have looked into the DGW adjustments that a lot of small cap coins move to when they get hit with a hashrate pump and dump.
Back to the large companies that are heavily vested in Bitcoin, they would do anything and everything to keep the system plugging along as fast as they could at that time. Allowing it to just crawl and build FUD would only hurt them in the end. Unless some really large bag holders get into a pissing match and want to watch the world burn, I think their self preservation of wealth will keep price and the network robust.

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November 28, 2019, 11:00:19 PM
Merited by frodocooper (1)
 #6

Unless some really large bag holders get into a pissing match and want to watch the world burn

Though admittedly if they did it wouldn't be the first time. I'm still working on recovering from the sales and savings hit from last year's dick-swinging contest price dive.

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November 29, 2019, 02:40:34 AM
Last edit: November 30, 2019, 03:03:31 AM by frodocooper
 #7

Yeah if I recall  BCH has emergency diff adjustment

and BTC does not.  Sooo  if you crashed price and Diff   on both BCH and BTC   BCH could make the emergency adjustment  and BTC  can't

We witnessed bitmain try this in spring of 2018  maybe the moron Wu will try it again.  Have to wait and see.

I see BTC as the super highway and alt coins as taxis and trucks needed to move transactions.
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November 29, 2019, 11:28:22 AM
Last edit: November 30, 2019, 03:03:46 AM by frodocooper
 #8

I think he is still made about BCH. But yeah it will take btc a solid amount of time to re adjust diff if a massive change and it sucks since we just got to ride it out.

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November 29, 2019, 06:56:14 PM
Last edit: November 30, 2019, 03:04:24 AM by frodocooper
 #9

First, a 95% drop in price overnight would a catastrophe of its own, it's already a doomsday scenario so wondering about the hashrate is like being concerned you let the door unlocked after a nuclear bomb got dropped on your town.

But I think the miners quitting and delivering another serious blow to bitcoin won't be happening. All are invested in bitcoin or if not directly they make a living out of this and abandoning it exactly at this point means throwing the gear in the dumpster as it's going to be worthless and watching their wallets turn into useless bits of data.

Knowing that keeping your gear only for another day would cost you a few hundred dollars and turn off entirely means you're going to lose everything, what do you think miners will choose?! Yeah, some will quit, some will still make a profit since they have the gear paid and they have the electric power already paid in a contract even if they use it or not, some use solar or wind power which would simply be burned away since they can't sell it to anyone and so on and on. And a few will take the hit for a few days just to not lose everything and so on. An instant drop in the hash rate to 3-5%? Nope, not going to happen!

We witnessed bitmain try this in spring of 2018  maybe the moron Wu will try it again.  Have to wait and see.

Maybe they keep quite deliberately or it's just the silence before the storm but my opinion is that they put any plans of a takeover on pause. Another price drop might be really catastrophic for them and more and more people are involved in bitmain, it's no longer a business that will act just on the will of one guy. Or at least I wish to think it's so!

And since we're one the catastrophic scenarios debate. What would a complete blackout in China do to the block time?

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November 29, 2019, 07:29:41 PM
Last edit: November 30, 2019, 03:04:42 AM by frodocooper
 #10

I for one would love to find out just how much gear is in China mining.  Has to be over 33% of the network.

I some USA and some Canada mines that add to over 15% of the network. So I guess more then 33% maybe as much as 66% of the hash is in China.

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November 29, 2019, 10:58:29 PM
Last edit: November 30, 2019, 03:05:29 AM by frodocooper
Merited by philipma1957 (2)
 #11

Though admittedly if they did it wouldn't be the first time. I'm still working on recovering from the sales and savings hit from last year's dick-swinging contest price dive.

Yeah that was a shit show, but more like a testicle wave and a tantrum. While it F'd things up confused people and was just a ridiculous end to a 1 year partnership before the true visions began to differ. I'm thinking people without any self interest involved flat out dumping on the market. There are large amounts of concentrated coins out there, luckily most people who have wealth want to retain and grow it.

We witnessed bitmain try this in spring of 2018  maybe the moron Wu will try it again.  Have to wait and see.

Some people do continue to try the same tactics over and over. I don't bother but is he still all in on BCH? Would be hilarious to be in a boardroom with him walking back in leading out with, "So I want to circle back to BCH and really sell it this time"

I for one would love to find out just how much gear is in China mining.  Has to be over 33% of the network.

I some USA and some Canada mines that add to over 15% of the network. So I guess more then 33% maybe as much as 66% of the hash is in China.

That would be interesting to find out. Ideally not when I'm trying to send out coins. I was always confused by the fact that we still only average global hashrate based on block solve times. I just assumed there was a way to track hashrate more specifically to at least attempt to pinpoint where it's actually distributed. I guess we can wait for the Chinese government to launch it's own SHA-256 coin and "convince" the people to mine it.

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