Although the price of Bitcoin has been sliding for months, BTC’s hashrate (the total computing power that a blockchain network uses to send and confirm transactions) is reaching astronomical rates. After increasing 15 percent in June, BTC’s hashrate rose higher than it has ever been.
What could this mean? Some industry experts claim that a rise in hashrate indicates that a growing number of entities are choosing to invest in Bitcoin, despite the fact that its price remains low.
“Price follows hashrate,” tweeted Max Keiser, journalist, and former Wall Street trader, adding that these words have been his mantra ever since the days that a single Bitcoin cost just $3. “New hardware is consistently being added to the #bitcoin network.” It’s not clear exactly when Keiser believes BTC’s price will catch up to its hashrate.
Price follows hashrate. https://t.co/p73ovdZarC
— Max Keiser (@maxkeiser) June 19, 2018
Bitcoin’s hash rate isn’t the only aspect of the network that seems to indicate a bright future. According to a report from Bitcoinist, transaction fees and mempool size have improved, partially due to increasing adoption of SegWit (‘Segrated Witness’: a software upgrade for the BTC network that makes fees lower and transactions faster). In fact, Bitcoinist reported in May that nearly half of all Bitcoin transactions were made using SegWit.
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The price of Bitcoin could also stand to benefit from the increasing adoption of the Lightning Network, a second-layer solution that makes transactions instantaneous and far less expensive. Since its implementation, its number of active nodes has surpassed that of the Bitcoin Cash network.
Many prominent voices in the cryptocurrency industry have publicly shown their support for both SegWit and the Lightning Network, including Charlie Lee, who tweeted that “Bitcoin is a great store of value. I’m fine spending ~$1 fee per transaction, but I can’t stand waiting 40+ minutes for a confirmation!…Lightning Network solves both these problems for Bitcoin and SegWit solves a few more!”
In other words, both of these solutions address some long-standing problems on the Bitcoin network: scalability and high network fees. If these issues can be tackled successfully, BTC could actually function as the ‘digital cash’ that its creator intended it to be.
Lightning Network solves both these problems for Bitcoin and SegWit solves a few more!
i hope Litecoin can help Bitcoin get SegWit soon.
— Charlie Lee [LTC⚡] (@SatoshiLite) April 16, 2017