Sunday, October 08, 2017

Did the end of daylight saving time destroy Bitcoin Cash?

Originally written on October 29th. I moved it out of the top page once the new block of Bitcoin Cash was mined 4.5 hours after the previous one and the article immediately deserved some big edits which I didn't want to spend time with.

The cryptocurrencies' capitalizations have only changed by a few percent in recent 24 hours. A remarkable exception is Bitcoin Cash which added 28% in recent 24 hours and 50% in recent 7 days.

Someone seems to be buying BCH big – a BCH 2219 transaction seems omnipresent. Two months ago, it was the Koreans. Also, the Bitcoin Cash has attracted almost the same hash rate as Bitcoin and, according to some sources, BCH has already trumped BTC. What is going on?

Some of these shifts have something to do with the difficulty and rewards of the mining that is being adjusted all the time and rather chaotically. But that leads me to the biggest observation:

According to the Bitcoin Cash explorer, no new block has been found for more than 4 hours by now. Imagine that: in the year 2017, this "high tech" payment system requires you to wait for over 4 hours for the tiniest glimpse of a confirmation that anyone has taken your transaction seriously. The latest block was computed at 7:37:28 a.m. Prague Winter Time – we ended the Summer Time in Europe by repeating 2:00-3:00 a.m. today twice.

Remarkably, the U.S. East Coast just had 2:37:28 a.m. – it was in the middle of the hour that would be repeated twice if the U.S. were also ending the daylight savings time. But the U.S., unlike Europe, didn't end it today. So there's some extreme mess going on. The blockchain needs some time stamps.

Could there be a fatal technical glitch, some sort of "Daylight Savings Y2K problem", behind Bitcoin Cash that has broken the non-currency? ;-) Note that before the latest blocks, several blocks were generated every hour.

Aside from the uncountable flaws in the "economic reasoning" that plague the cryptocurrencies, there may still be ordinary technical glitches. No one can guarantee anything to you. To some extent, despite the immense technical and mathematical complications, all these cryptocurrency networks are being run by volunteers – this whole system is nominally a type of communism without any real accountability of anyone to anybody. At most, a committee of the cryptocult commissaries would tell everybody "we're sorry, pals" – and maybe even that could be too much to ask. ;-)

Because of some timestamp glitch, or maybe a flawed algorithm that has adjusted the difficulty to basically "impossible heights", BCH could easily break down. BCH is now the third cryptocurrency in the world by capitalization. 8 out of 170 billions would evaporate – some 5% of the crypto "wealth". ;-) Other cryptocurrencies could follow in the future.

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