Why does blockchain need to reduce production (Why blockchain cannot develop)?

Why does blockchain need to reduce production? There are three main reasons. The first is the decrease in the number of miners. The second factor is the reduction in block rewards. The third factor is the increase in deflationary models and the demand for new currencies to be mined.

From the above chart, it can be seen that when the price of Bitcoin falls, many small exchanges sell their coins to avoid losing money. However, as the price of Bitcoin continues to rise, some well-established exchanges have also begun to close accounts, causing panic selling in the market. Therefore, people are still paying attention to the market, and the current situation is just where this kind of situation occurs.

We know that the bull market before the halving was driven by a large investor. However, since no one actively participates in this movement, the market sentiment will naturally be affected. As a result, a large number of investors are eliminated, indicating that the industry has entered a bear market. If the previous two years’ market uptrend was caused by the dumping of institutional investors, then the second half of this year will see another major plunge—also known as the “Bitcoin breaking $10,000” After that, the market may start another bull market. Therefore, this year’s reduction in production is a very important milestone. Although the halving itself does not mean that it will end immediately, the reduction in production will definitely bring more new users to the market, further stimulating people’s confidence in blockchain technology and attracting more attention to it.

So what stage is next? Let’s take a look at the following two charts:

The first chart shows the performance of the BTC/ETH trading pair since December 2017: Bitcoin has risen by about 6% in the past 24 hours, EOS/BCH, BSV has risen by 8%, 103%, 214%, 125%, and 15% in the past 24 hours, respectively. Bitcoin has risen to a maximum of $43,000 within 24 hours, with a daily increase of 7%.

It can be seen that in the past two weeks, BTC has continued to adjust downwards, with a minimum touching $21,900, and the current price is around $34,000. However, it is worth noting that BTC’s adjustment range is large, and since July 14, 2020, BTC has shown a significant upward trend. And since the end of May last year, BTC has been maintaining a relatively stable position, although it has rebounded slightly in the past few days, it has not continued to rise as mentioned earlier, but has been declining. This is the first major adjustment that the market generally believes that Bitcoin will experience recently, and its fundamentals have shown a significant new low. At the same time, the relationship between Bitcoin and gold is still uncertain, because its volatility is still a very volatile asset. Once there is a drastic change, it may cause even greater fluctuations.

Why blockchain cannot develop

Editor’s note: This article is from Lianneican (ID:lianneican), author: Lianneican Jun, authorized for reproduction by Odaily Star Daily.

Introduction:

The development of blockchain technology has entered a stagnant stage. In the past 10 years, the development speed of blockchain has been very slow, but its application scenarios are still very extensive. From the birth of Bitcoin to now, after a cycle of bull and bear markets, we see more and more people participating and gradually forming a consensus and recognition of this new industry ecosystem. “Decentralization” is a common view of the development of the cryptocurrency market, but many people think these are all speculative bubbles. Or is it that the prices of digital tokens are continuously falling now, and the reality has not been realized by anyone? Why does this situation not occur? The reason why blockchain develops so slowly is that it is a completely new technology without a solution and has too many disadvantages, which makes it difficult for many projects to even achieve their goals.

In order to promote the concept of this new technology, blockchain must have the following characteristics:

1. Lack of reliable data sources. 2. Low cost of trust. 3. “Data island effect” (“sharing economy”), because data cannot be copied or tracked, there are loopholes.

4. Inefficiency and weak resistance to attacks. 5. The system needs a large number of users to maintain its operation in extreme cases.

6. The underlying platform is still in the early stage of development, immature, and there is still a lot of room for more things to be done.

7. There are currently no large-scale landing cases for applications.

8. Some companies focus on security to avoid negative impacts on themselves and damage the company’s reputation. Although many companies are working hard to find solutions, they are still powerless when encountering various obstacles and difficulties in the actual application process. For example, Tencent Cloud has launched a security-based DAPP-a distributed identity authentication service platform, which realizes identity authentication through smart contracts. However, for companies that want to try to trade with existing tools, these solutions are not particularly good choices or directions. They can only provide more help in different fields.

9. Most corporate business models cannot meet the requirements, and most companies are reluctant to invest in order to pursue better profit margins.