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Bitcoin Death Spiral versus Bitcoin Cash

Bitcoin Death Spiral versus Bitcoin Cash

Bitcoin recently gained a new competitor: Bitcoin Cash. Bitcoin Cash is a fork of Bitcoin which boasts a configurable maximum block size, currently set to 8MB. This is an increase from Bitcoin’s maximum block size, which is only 1MB. With this fork, a few terms have been being thrown around, including the “Bitcoin Death Spiral”.

A few other basic terms

Before I go further, here’s some explanations for a few terms you’ll see throughout this article.
Bitcoin Cash has what’s called the “Emergency Difficulty Adjustment, or “EDA”: difficulty adjusts downwards if it takes longer than 12 hours to mine 6 consecutive blocks.
Bitcoin and Bitcoin Cash both have the “2016DA”: Every 2016 blocks, if it took longer than 14 days to mine those blocks, difficulty adjusts downward so the next 2016 blocks will take only 14 days. The reverse is also true, adjusting upwards if it took less than 14 days.

Difficulty adjustments and mining profitability

On Sunday, August 20th at around 12am EST, Bitcoin Cash had it’s 2016DA and difficulty adjusted downward significantly. The drop in difficulty was likely the cause of the price spike that happened over the days before. A lot of miners have been switching over because of it, which is causing Bitcoin Cash to cruise straight through the next 2016 blocks very quickly. Instead of reaching it in 14 days as we’re supposed to, we’re going to reach it in about 2. We’re going to see a massive spike in mining difficulty.

When this difficulty spike happens, obviously some miners are going to switch back to Bitcoin for profitability, although some powerful miners have already demonstrated a loyalty to Bitcoin Cash by mining at loss of opportunity cost. However, we can already see that mining Bitcoin Cash causes Bitcoin’s mempool to fill up (currently 57,000 transactions, 76MB, which would take 76 blocks to fill, excluding the transactions that would take place while those 76 blocks are mined.) Miners switching back will clear up the mempool temporarily. However, without those miners we’ll more than likely see Bitcoin Cash’s EDAs to activate, dropping mining difficulty again. These EDAs will again make it more easier to mine but they won’t be as severe as last time.

The miners that stay will push us to the next 2016DA. It will take less time to get to that 2016DA than the last time, so the difficulty will still drop though not as significantly. Since the difficulty drop won’t be as significant, we won’t cruise through the next 2016 blocks so quickly, which will leave more time for the BTC mempool to fill up before the difficulty raises again.

Okay, so what is the Bitcoin Death Spiral?

This will “spiral” back and forth, each time the BCH 2016DA taking longer and longer to reach until Bitcoin Cash is consistently at the 10 minute block interval. Each time, Bitcoin’s mempool will fill up more and more. This creates a lack of faith in BTC and it’s value. This is the Bitcoin Death Spiral.

What do you think? Is the Bitcoin Death Spiral something to worry about?

Bitcoin Cash is Coming to Rocketr

Bitcoin Cash is Coming to Rocketr

On August 1, 2017 at exactly 12:20 UTC, Bitcoin is scheduled to fork off into two coins. These two coins will be Bitcoin (BTC) and Bitcoin Cash (BCC or BCH — the abbreviation isn’t finalized).

Bitcoin Cash?

Bitcoin will be forking off into two different coins. One will still be called Bitcoin, but the other will be called Bitcoin Cash. Bitcoin will go on to implement Segwit2X, whereas Bitcoin Cash will exclude Segwit but increase the blocksize to 8mb. At the time of the fork, any addresses holding Bitcoin will also be holding the same amount in Bitcoin Cash.

Many exchanges such as Kraken, Bittrex, and many more, will support both BTC and BCC. However, some exchanges, such as Coinbase, will not support BCC.

What is Rocketr going to do?

Because most exchanges will support both bitcoins, the current BTC as well as BCC, Rocketr will also support both. However, to prepare for the fork, Rocketr will be disabling Bitcoin payments on August 1 at 11:00 AM UTC. We will re-enable Bitcoin payments after we’ve made sure the Bitcoin network is reasonably safe. We will enable Bitcoin Cash payments shortly after, when its network is also reasonably safe.

By default, the current BTC payment method will still support the Bitcoin and not Bitcoin Cash. If you also want to enable BCC and accept BCC payment methods, you have to go to Rocketr Payment Settings and enable the BCC payment method. From here on out we, as well as the bitcoin community, will treat BCC and BTC as separate coins. Because of this, before you can enable BCC, you have to download a BCC supported wallet and use the address generated from that wallet. You can view a list of BCC supported wallets here.

When a buyer purchases an item from you, he will be able to select either the BTC or the BCC payment option and pay accordingly. Keep in mind that BCC and BTC prices are NOT the same and no one knows where the prices will settle (if they do at all). We’re using the Coinmarketcap ticker to calculate BCC to USD for the time being. Please note that because the fork puts the blockchain in a vulnerable position, we will force all transactions to get at least 3 confirmations before an order is marked complete.

How will this affect my sales?

At Rocketr, we feel that while bitcoin is sailing these uncharted waters, we want to make sure our sellers are able to continue their sales as seamlessly as possible. By accepting both BTC and BCC, you will ensure that all your buyers are covered and you don’t lose sales. We will temporarily suspend all BTC and BCC transactions on August 1st while we implement the new changes. We will then slowly start enabling BTC and BCC.

Why is my Bitcoin taking so long to confirm?

Why is my Bitcoin taking so long to confirm?

A question we’ve been getting a lot recently is, “Why is my Bitcoin taking so long to confirm?” Not just on some of the bitcoins that we send out to sellers but also on bitcoins we’re receiving from buyers. Let’s go into detail on this, but first let me clarify on what a confirmation is.

 

What is a Bitcoin confirmation?

When Bitcoin is sent, it is initially “unconfirmed”. The transaction is broadcast to the network, but the miners haven’t placed it into the block chain yet; it is still in their “mempool”. Miners add transactions to blocks (to be added to the block chain) by completing proof of work. Usually they select transactions with higher fees included first. That means if you’re sending bitcoins to somebody and you want the transaction to be confirmed more quickly, you just need to pay higher fees. Confirmations are just blocks that have been mined after the block containing your transaction.

 

So why is my Bitcoin taking so long to confirm?bitcoin mempool size

Currently the maximum block size is only 1MB. This worked fine for awhile, but with Bitcoin’s recent surge in popularity, it’s no longer viable. The average size of a transaction is 500 bytes. Since blocks also contain a little more data than just the transactions, this means that on average each block has a maximum of 1,999 transactions. The mempool is now consistently full.

 

What we’re doing about it

Unfortunately, there isn’t a lot that we at Rocketr can necessarily do about it. Our Bitcoin nodes are all running Bitcoin Unlimited to help signal to miners that the network is ready for larger blocks. We regularly modify the fees we pay when sending bitcoins so that they reach our sellers within a reasonable time frame, but we can’t control how quickly we receive bitcoins from buyers because that’s ultimately related to the fees they paid for their transaction. Users can submit transactions to ViaBTC’s Transaction Accelerator manually to help speed up confirmation time.

Payment Gateways Do Not Have to be Stressful

Payment Gateways Do Not Have to be Stressful

Rocketr - a stress free payment gatewayTime and time again we see unlucky individuals struggling with the the giant that is payment gateways and payment processors. Whether it’s issues with dealing with the payment processor themselves, chargebacks and disputes due to fraudsters, or simply not wanting to put the vast amount of personal information required onto the internet; we know how scary of an experience it may be. However, payment gateways do not have to be stressful. Enter Rocketr, a stress free payment gateway. We simplify buying and selling on the internet.

Multiple payment methods, one dashboard.

Tired of having to manage all your payment methods through too many different sites? So are we. That’s why we group several different processors into our easy to navigate dashboard. Accept PayPal, Bitcoin, Ether, Stripe, Perfect Money, and more with ease, leaving you more time to deal with everything else. With customizable options such as coupons, variable pricing, required cryptocoin confirmations, and more, you’ll be able to tailor your sales requirements exactly the way you want.

Payment gateways should help promote products.

We believe that payment gateways should provide their users with tools and features to aid in the promotion of their products and services. That’s why Rocketr offers features such as email marketing to help you inform your buyers about updates or new deals that you offer. We even optimize your store and products for search engines to help customers find you.