Bitcoin Hashing Power Will Drain. Hope Lies with Primecoin
Struggling in a mire of a long bear market. The once bustling crypto world is now a rain-withered garden. What still turn heads and provoke debates are some seemingly contradictory information roaming on the internet. For example, the falling Bitcoin price and its sky-rocketing hashing power. While losing over two thirds of its value since last December, the hashing power more than doubled.
Will Hashing Power Sustain
Perhaps there is a reason. For years, a myriad of crypto-currencies flashed through the market and disappeared into the sky rim, while Bitcoin remains rock solid. Will it last in the long term, though? My answer is no. Bitcoin’s value largely relies on its security level, its transactional capacity, and the huge user adoption. However, they may not hold much longer.
In Satoshi’s message in the genesis block, he expressed his discontent in the real world’s infinite inflationary economy. This explains the strict supply regimen for Bitcoin — halving approximately every four years, a time bomb that could bring Bitcoin down to sea-level.
The security level of a blockchain is directly proportional to the total cost of mining — also the cost of a successful attack. Unfortunately, it is painfully obvious that Bitcoin minting will one day unable to cover the cost. In fact, in merely 10 years, the block reward will reduce to a measly 1.5625 BTC. An adjustable transaction fee was designed to mitigate the issue. However, if the transaction fees were to be high enough to compensate the lost reward, it could lose its appeal to average users, and demand will flow towards competing crypto-currencies. To make things worse, the emerging lightning network drove transaction fees are even lower. Once undercompensated miners start to leave, security level drops. The vicious cycle among all three intrinsic values, once initiated, is an unstoppable and catastrophic avalanche.
Sunny King’s Foresight
The protagonist in this story, Sunny King, designed Primecoin in remedy to Bitcoin’s flaws. Not only does it solve the energy waste problem in mining, it offers a much longer-lasting and reasonable supply schedule, as well as adds the flair of decentralization in the minting rule. The block reward is calculated by R = 999 / D².
Keeping the security level fixed, it will take 35 years for the current reward to halve, and even longer afterwards. It can easily be covered by the appreciation of the coin, providing centuries of usability. The inflation is further controlled by the burning of transaction fees, which conveniently makes Primecoin immune to capacity multipliers such as lightning network. The extremely low transaction fees and 30 second confirmation time also provides transactional convenience unparalleled to Bitcoin, making it the ultimate altcoin.
I risk to make a bold prediction here: In the next 5 years, we may see the demise of Bitcoin, when Primecoin’s day comes to light.
