Bitcoin just might have been hit in it's achilles heel. The current bitcoin's downward spiral in price and the rise of bitcoin cash might be the direct corelation to the stupid economic policy and complete lack of understanding of the concept of store of value. To sum it up this death spiral of bitcoin is the direct result of 100 dollars per transaction is cool because bitcoin is digital gold mentality.
Anatomy of the bitcoin death spiral
- Bitcoin block sizes gets full
- Number of unconfirmed transactions skyrocket
- Users start bidding for transaction inclusion
- Transaction fees skyrocket
- Bitcoin's difficulty adjustment adjusts to higher difficulty
- Bitcoin price takes a dip for any reason
- Miners switch to more profitable cryptocurrencies
- Bitcoin's difficulty adjustment doesn't kick in until the 2 week cycle
- The cycle continues with more velocity
Now in action, bitcoin block sizes were full for a couple of months.
Number of unconfirmed transactions skyrocket
Number of unconfirmed transactions as of writing is more than quarter of a million. (yes. you read that right!)
Transaction fees skyrocket
Bitcoin difficulty gets higher
Bitcoin price takes a dip
Miners switch to more profitable concurrencies
This hasn't happened on a large scale yet since bitcoin core is the more profitable coin to mine. When the price of bitcoin comes down to a point where bitcoin cash is more profitable to mine. The death spiral will be too fast for bitcoin because bitcoin cannot react to it for the next two weeks until the next difficulty adjustment.
At that time it might be too late for bitcoin.
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