Story - 40% Bitcoin Price Corrections 0:54
Shout out to Twitter user Igor Ybema for reminding me of this tweet that I posted on the 15th of September.
If we click on the image to zoom in we see the Bitcoin price running up 1826 to $5,000.
Then within a couple of weeks it drops from $5,000 to $3,000.
That was a 40% correction.
For the benefit of the podcast listeners, I also drew some arrows on the chart which pointed to the 40% drop with some text saying “1 year from now, this…will look like this.” and then there’s another arrow pointing to this relatively small price correction from a couple of months before.
My intention was to give myself and everyone else some perspective.
And low and behold, it didn’t take 1 year, it took 3 months because when we switch to the Bitcoin chart of today…
We see a very similar pattern except at different price levels.
This time we ran up from 5400 to 20,000 and then crashed 45% down to $11,000.
And for those of you watching the video version, this white circle is the previous price crash that I featured in that tweet, it doesn’t even register as significantly.
If this pattern were to continue, then one day we would have a run up to $1m and then a price correction to $550,000.
Hypothetically that’s true but realistically I don’t think that will happen because by the time we reach a $1m Bitcoin, we’ll have a lot more liquidity which will reduce volatility.
In the meantime though, we may get some interim booms and busts that follow this pattern that make the recent crash look equally insignificant.
Story - Schnorr Signatures, The Next Big Upgrade The Bitcoin Core Code 4:32
This comes from Mr Sam Wouters Medium blog. This guy is a speaker and Bitcoin Consultant.
As we all probably know by now there are 2 distinct camps in the Bitcoin community that have opposite ideas about how to increase the capacity of Bitcoin so it can process more transactions.
The Bitcoin Cash community favor an approach that requires more computing resources but is simpler, while the Bitcoin community favor a creative approach where new techniques are invented to achieve more and more with the same resources.
When the Bitcoin Cash community criticise Segwit, the main objection is that Segwit doesn’t improve scaling.
That is true because Segwit was never meant to be a scaling solution.
It doesn’t increase capacity slightly but that’s not it’s primarily purpose.
Activating Segwit was a step of preparation to lay the foundations for many other technologies to build on. Now that we have Segwit, the road for those additional technologies is clear.
One of those technologies is something called Schnorr signatures.
As far as I understand it, Segwit is a prerequisite to use Schnorr Signatures.
That means the code cannot be easily integrated into Bitcoin Cash in its current form.
In a nutshell Schnorr Signatures as the name suggest, is a new way of handling how transactions are signed so that the signatures use up less storage space, and thus allow more transactions to fit inside a block.
And to put that into perspective, we are looking at a 25% reduction in storage and bandwidth.
This is accomplished basically by having all transactions just have 1 single signature, no matter how many addresses are involved.
[see Today’s Signatures Image and Schnorr Signatures Image]
But that’s not all, says Sam.
Another big benefit of this increased efficiency from Schnorr signatures is a reduction in the effect of spam transactions.
If we scroll back up to those diagrams, you can see that if I wanted to spam the Bitcoin network, I could intentionally send dozens of transactions and make sure they involved dozens or even hundreds of different addresses.
The size of those transactions would mean the block space would get full without requiring a huge number of transactions.
With schnorr signatures it greatly levels the playing field since those spam transactions would be on a level with legitimate transactions, each having to pay for only as much space as a single signature requires.
As Sam points out here, the signature is often the part of the transaction that takes up the most space in a block.
Schnorr signatures don’t prevent spam, they would just make them less disruptive to the regular users.
While this all sounds very exciting, the major thing holding it back is the actual adoption of Segwit.
Segwit was a backwards compatible soft fork, meaning Bitcoin can flow in and out of Segwit and non-Segwit addresses freely.
And as we can see from Segwit Party, still only around 10% of all Bitcoin transactions are using Segwit addresses.