How will Bitcoin solve its energy problem?

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Bitcoin is ranked 40th in terms of electricity consumption in all countries worldwide. A new study has revealed the growing energy problem.

Bitcoin’s energy crisis and Ethereum Code researched

With the energy of a Bitcoin transaction, a dishwasher could work for a year. This does not mean that Bitcoin transactions would require large amounts of energy, but only that many miners are in circulation. Currently, miners earn about $100 per transaction. Digiconomist estimates Bitcoin Miner’s power consumption in its Bitcoin Energy Consumption Index (BEXI). According to its data, Bitcoin Ethereum Code consumes 67.91 TWh annually, which is slightly more than Chile, which ranks 40th in the world at 66 TWh. They estimate the electricity consumption per transaction at 929 kWh. The biggest problem, however, is that there is no recovery in sight for the time being and energy consumption is rising steadily.

The index must calculate back the energy consumed using values from the past. It starts with how much money the miners earn and how much they are estimated to spend on electricity. Then one looks at the electricity price and estimates how much electricity is consumed. The index model is of course based on many assumptions and planning data, but it is almost impossible to determine the exact consumption.

Will the Bitcoin Lightning Network help?

The Lightning Network takes Bitcoin transactions out of the block chain by establishing channels between users. Transactions between them take place and are only recorded in the block chain when the channel is closed. This reduces the number of transactions that the nodes have to confirm, and thus the power required to maintain the network.

However, most of the power is used for Bitcoin mining. It is unlikely that the number of transactions in the block chain will affect the number of miners. Bitcoin transactions have halved since December, but the difficulty of mining has doubled, suggesting that at least twice as much hash power is used.

The International Energy Agency published that renewable energies will grow by 40 percent by 2022, stressing that renewable energies dominate the creation of new energy sources. Iceland has already shown how it can work with renewable energy. Essentially, renewable electricity enables the operation of the Bitcoin network without changing the underlying structure (PoW – Proof of Work).

Other ways to solve the problem are, for example, switching to proof-of-stake. Digiconomist estimates that Ethereum consumes about a third of the electricity. However, there are also some criticisms (centralisation…) of the proof-of-stake, so this is unlikely to be an option. As long as Bitcoins can be mined (year 2140) and the price is at an attractive level, renewable energy seems to be the only option for the first time.

Russian airline issues flight tickets via Blockchain

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We believe that content monetisation and eCommerce will be one of the major drivers behind the global demand for micropayments, especially in developing countries. Billon aims to offer its eCommerce and content monetisation merchant services in Poland this autumn and then in the UK by 2018.”

With this project, Billon would for the first time offer a cloud and mobile peer-to-peer solution for so-called Fiat currencies based on DLT. The first trials in the area of content monetisation were successfully completed in 2016. With the support of the European Union, Billon did not, however, make use of public funding programs for the first time. In November 2016, the start-up company had already participated in the sandbox programme launched by the British Financial Conduct Authority.

Russian airline issues flight tickets via Blockchain

Since July 2017, the airline S7, one of Russia’s largest airlines, has been handling ticket sales via the Ethereum block chain. The airline was supported in its implementation by Alfa-Bank, as the news magazine Kommersant reported. However, it was not clear whether it was a public or a private database. Airline S7, which is the country’s second-largest airline with around 9.5 million passengers, wants to use this technology to reduce the transaction time between intermediaries and the airline, which has so far been around two weeks. Payment transactions are also to be processed faster and more effectively because commissions received by intermediaries can be automatically deducted from the invoice amount.

The blockchain in the automotive industry: Renault plans to save the repair data in a database
Blockchain Renault
As was announced in the summer of 2017, the French car manufacturer Renault is working on a block-based and digital maintenance book for vehicle repairs. The manufacturer is developing a prototype in close collaboration with Microsoft, the Microsoft cloud platform Azure and VISEO, a blockchain company. Renault’s main objective is that the database should contain all the maintenance information from dealers and garages in the database. This would allow all the information, including a time stamp, to be clearly displayed on a single platform. According to the Renault managers, this option is of interest not only to dealers and repairers, but also to insurance companies.

Ethereum founder informs about the progress of Bitcoin Code

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Last week the Community Ethereum Development Conference took place, and Ethereum co-founder Vitalik Buterin reported on Casper’s progress and the Proof of Stake (PoS) consensus protocol to drive the future of Ethereum.

Ethereum is the most popular platform for the introduction of new tokens by ICOs and has taken a leading role in the expansion and maturation of the crypto industry. Etherscan has more than 81,000 ERC-20 token contracts, many of which are associated with Ethereum. ICOs based on the Ethereum Blockchain have already collected nearly seven billion dollars this year.

Proof of work is too much work
Like Bitcoin, Ethereum’s blockchain is based on a Proof of Work (PoW) consensus protocol that has proven incredibly effective at securing the network and maintaining the distributed ledger. Proof of Work is best known for its energy-intensive mining.

Bitcoin Code is too much work

This is also the criticism of mining, as the PoW consumes too much electricity, Bitcoin Code is onlinebetrug not environmentally friendly, and could theoretically endanger decentralization. Buterin and other blockchain developers have long expressed concerns about PoW’s energy consumption and its limitations as a scalable protocol. For example, a single unit with sufficient computer power could disproportionately control the blockchain.

Casper – High Staking Entry Barrier
In January, Ethereum introduced Casper’s Testnet, and crypto investors responded by seeing the price of ether exceed $1,000 for the first time. Last month, more details became known about the algorithm, formally known as Casper FFG, which will drive the network’s transition to a PoS (Proof of Stake) model.

However, the entrance fee is quite high – according to Buterin, users need 1,500 ETH to participate in Casper Staking, which is over $1.1 million. The net requires such a high admission price, as it can only accommodate a relatively small number of nodes. However, it is rumored that Casper can guarantee a higher number of nodes after Sharding has been implemented.

The user’s initial ether amount is stored in an intelligent contract, and the PoS rewards are paid out accordingly. The higher the initial amount, the more the user will be paid for his effort. Based on an initial investment of 10 million ether, Buterin estimates that a node that is continuously online could generate a return of up to five percent. According to Buterin, users would only need to be online a third of the time to achieve a positive return.

Interestingly, nodes are rewarded with a PoS concept for connectivity, but also punished for their inactivity. In addition, the Casper protocol penalizes users for things such as staking pools. As the development of the network progresses, the entry barrier of 1,500 ethers is likely to decrease.

Bitcoin Price Highlights

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Bitcoin price may be reversed as an inverse head-shoulder formation is shown on the 1 hour chart
Technical indicators point to a return of bullish momentum
Technical indicators Signals
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance Bitcoin Revolution is downwards. This indicates that sales pressure is likely to continue.

However Bitcoin Revolution resistance is downwards

However, the gap between the moving averages has narrowed considerably, indicating an imminent bullish crossing in the near future. If the 100 SMA crosses the longer-term 200 SMA from bottom to top, this is an indicator of an upward trend change. The bitcoin price is traded Bitcoin Revolution above these moving averages, which is a sign of a bullish momentum.

The RSI is pointing upwards without reaching overbought conditions, suggesting that buyers could continue to take over. The oscillator is currently at 40 and signals a slight sellers market. Stochastics are similar to RSI.

market factors

Bitcoin has experienced a slight recovery in the last few days. Currently, there are many problems in the traditional financial world. There is a vote of no confidence in Spain today and an Italexit is also a possible subject. In addition, US supervisors classify Deutsche Bank as a problem bank, which had a direct impact on the share price. The question is how an impending economic crisis will affect bitcoin. A well-known youtube is convinced that the traditional financial market will collapse in 2018 and push Bitcoin to a record level of $50,000.

Ethereum Prize Highlights
Ether price struggles to break the $585-587 resistance range against the US dollar
The bullish trend line is intact and supported on the hourly chart at $565
ETH must remain above the $565 support and the 100 hours SMA to avoid a down reaction
The Ether price must not breach the 100-hour SMA to remain in a bullish zone.

Technical indicators Signals

There was a slight upward trend above the $575 resistance. However, the buyers failed to keep momentum above the $585 and $587 resistance levels. A short term high was formed at $586.31, after which the price began a downward correction. It declined to below $580. However, the decline was protected by $570 support. The highlighted bullish trend line at $565 on the hourly chart is intact. Finally, the 100-hour SMA is also positioned near the $565 mark. Therefore, the $565 support is immensely important. A break below $565 could mean a major downward correction.

Ethereum Chart from TradingView

Ethereum price analysis
Looking at the graph, the current price development is positive as long as ETH is above $565 and the 100-hour SMA. On the other hand, buyers must overcome the $585-586 resistance hurdles to further profits. The MACD is slightly in the declining zone. The RSI is moving downwards and is currently close to the 50s mark and shows a fairly balanced relationship between buyer and seller. The highest support level is $565, while the resistance is $586.

Fed Report: Bitcoin Futures Blame for Fall in Prices

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The introduction of Bitcoin futures in December last year, which gave investors the opportunity to bet against the value of Bitcoin, played a major role in the fall in prices in late 2017 and early 2018, according to the US Federal Reserve.

Bitcoins Connection to the futures markets

In the Federal Reserve Bank of San Francisco Business Letter published today, May 7, the authors conclude that Bitcoin’s rapid startup and subsequent fall in prices following the introduction of futures was no coincidence. Rather, it is in line with the trading behaviour typically associated with the introduction of futures markets for an asset – a situation comparable to the securitisation of bonds in the early 2000s.

“THE FOLLOWING BUST WAS DRIVEN BY THE CREATION OF INSTRUMENTS THAT ALLOWED PESSIMISTIC INVESTORS TO BET AGAINST THE HOUSING MARKET,” WROTE THE FEDERAL RESERVE. “THE EMERGENCE OF THE BLOCKCHAIN ALSO INTRODUCED A NEW FINANCIAL INSTRUMENT, BITCOIN, OFFERED BY OPTIMISTIC INVESTORS UNTIL THE INTRODUCTION OF BITCOIN FUTURES PESSIMISTS ENABLED MARKET ENTRY, WHICH CONTRIBUTED TO THE REVERSAL OF BITCOIN PRICE DYNAMICS.

Federal banking politicians have, especially in recent months, rejected bitcoin as an alternative currency to the dollar or other funds supported by the central bank. San Francisco Fed President John Williams, who will move to New York next month to head the Fed, was particularly critical.

CME Group & Cboe Global Markets

On 17 December, CME Group Inc. went public as the second stock exchange after Cboe Global Markets Inc. This date coincided with Bitcoin’s all-time high (ATH), which was then traded at around $20,000. The report’s authors, Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak and Patrick Shultz, said that the introduction of futures has ended’unilateral speculative demand’.

One step at a time

The Federal Reserve argues that the use of Bitcoin as a boundless medium of exchange – which they call “transactional benefits” – will be the biggest factor in determining the price:

“WHILE WE UNDERSTAND SOME OF THE FACTORS THAT PLAY A ROLE IN DETERMINING THE LONG-TERM PRICE OF BITCOIN, OUR UNDERSTANDING OF THE TRANSACTIONAL ADVANTAGES OF BITCOIN IS TOO IMPRECISE TO QUANTIFY THAT LONG-TERM PRICE. BUT AS SPECULATIVE DYNAMICS ARE DISAPPEARING FROM THE BITCOIN MARKET, THE TRANSACTIONAL BENEFITS ARE LIKELY TO BE THE FACTOR THAT WILL DRIVE VALUATION FORWARD.”