Coinsetter: Block Size Issue Can Affect Prices, Trading

US-based Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term exchange Coinsetter assesses that the ongoing block size issue can eventually have ripple effects on bitcoin's trading and prices.

While nothing earth shattering, its analysis is a reminder of the interconnectedness between the Bitcoin economies of Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term, mining/validation and exchange. In most debates on the topic, Bitcoin's core technology is the focus, the effects on exchangeability seldom raised.

In its analysis, Coinsetter suggests that leaving the block size limit as is (1 MB) may adversely affect Bitcoin's value as a quick, international transactional system, if its adoption continues to increase as anticipated. With more transactions, the available capacity of blocks is reduced, and transactions will have to wait more than the current average of 10 minutes. This was experienced during the latest 'stress test'.

The reduced value may then translate into reduced prices. In addition, longer confirmation times may hamper trading activity. Market participants may face delays in trading their capital, including arbitrageurs for whom timing is important. This may result in a less efficient market.

On the other hand, an increased block size can adversely affect miners, particularly the smaller variety or those based in locations with underdeveloped internet infrastructure. For them, processing larger amounts of data will be too difficult, thereby compromising the goal of Bitcoin's globalization.

Miners facing increasing costs may no longer find it profitable to operate, and may resort to buying bitcoin instead of mining it. Perhaps counterintuitively, a reduced mining network can actually lead to increased demand and prices.