It’s the settlement assurances, stupid

How to evaluate blockchains

Nic Carter
Jul 22, 2019 · 24 min read
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What’s the interesting thing about Bitcoin?

Evaluating settlement

Quantifiable settlement variables

Ledger costliness

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Annualized Bitcoin miner revenue, USD terms. Data: Coinmetrics.io
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Block width is roughly proportional to the relative security spend of each blockchain

Yield from reversal: transaction size

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Numbers as of 07/15/2019. Data: Coinmetrics.io

Monopolist on its own hash function

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Relative share of miner revenue; BTC (orange), BCH (green), BSV (red). Coinmetrics.io
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Less quantifiable settlement variables

Yield from reversal: goldfinger attacks

Top Heaviness

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Liquid derivatives markets

Additional hardware considerations

Case study: Kraken’s confirmation requirements

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Source: Kraken Deposit Processing Times, Coin Metrics estimates

Some takeaways

I. Block time is arbitrary, and changes little

II. Bitcoin is either providing massive security overkill, or other blockchains are critically at risk

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Daily USD miner revenue, smoothed (7dma). Coinmetrics.io

III. Settlement is always probabilistic

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IV. By being open about its security model, Bitcoin’s PoW is usefully transparent

Summing up


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