Bitcoin has had a stellar year, increasing in value by more than three times from since January. During this time, the hashrate for Bitcoin mining has also reached a new all-time high (ATH).
Hashrate is the speed at which a computer is completing an operation in the Bitcoin code. At 74.5 million terahashes per second, the current ATH is more than 20% greater than any previous hashrate. What’s more, this is eight times as many hashes per second as the rate when Bitcoin hit its highest price at the beginning of 2018.
The news was first reported via Twitter.
— A v B (@ArminVanBitcoin) July 7, 2019
But Why Does Hashrate Matter?
There are at least two reasons why this number is particularly important. First, hashrate indicates the number of miners and transactions on the blockchain. As hashrate goes up, it indicates greater computer activity on the network — which is a sign of network health and viability.
Increasing activity on the network would be expected as adoption grows. While the price may currently be relatively stable, increasing hashrate is a good indicator that the price will likely rise as greater numbers of adopters create transactions on the network.
In addition, this increase in hashrate also provides increased security for the network overall. To reverse and reroute Bitcoin transactions, an attacker would need to control 51% of the total hashrate. With the rate at current levels, this would be practically impossible.
Though the changes of a 51% attack on the Bitcoin network is extremely slim, such an attack did actually occur on the Ethereum Classic (ETC) chain in January of this year. The attacker was able to steal $100,000 through reversed transactions.
However, some naysayers have pointed out that a high hashrate does not necessarily mean that the network is truly decentralized. Some have argued that the distribution of overall rates shows a centralizing tendency with just a few large mining organization responsible for most of the rate.
Nevertheless, a quick perusal of the mining rates shows that there is a relatively wide distribution of hashrate. No one miner is taking more than 20% of the hashrate, a far cry from the necessary 51%. Even a combination of the top three miners would fail to reach this number.
Do you think the hashrate numbers are a good sign of increasing adoption growth for Bitcoin, or will the rate drop again in future months? Let us know in the comments below!
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Images courtesy of Shutterstock, Twitter.