An article on Bitcoin Magazine (@BitcoinMagazine) shows the trend towards decentralization occuring in three critical areas for Bitcoin.
The article can be summarized as this:
- 2011, Mt. Gox w/ 90% share.
- By mid-2012, Mt. Gox w/ 62%, next largest - BTC-e w/ 7%.
Currencies traded against bitcoin:
- 2011, USD w/ 88% share.
- By mid-2012, USD w/ 74%, next largest - GBP w/ 8%.
- 2011, Deep Bit w/ 40% share.
- By mid-2012, multiple at around 10% share.
Excerpts from the article:
“Data from the past year shows that three types of decentralization have all been taking place in the Bitcoin economy since roughly the beginning of 2012: the decentralization of exchanges, the decentralization of currencies and the decentralization of pools.”
“As for liquidity, while in 2011 one could often expect some exchanges to have prices that differ from each other by as much as 5% and ask-bid spreads that are even greater, now an increasingly more advanced arbitrage market is effectively removing both of these inefficiencies.”
“The prime importance of the US dollar itself is decreasing [and] non-USD markets are growing in importance.”
A post by Vitalik Buterin in Bitcoin Magazine (@BitcoinMagazine) describes the upcoming block reward subsidy halving. Excerpts:
“Projected to take place on Wednesday [November 28, 2012] at around 18:00 UTC, for the first time ever in Bitcoin history, the rate at which new bitcoins are generated will permanently be cut by a factor of two,”
“[The block reward earned by miners is] the only way that new bitcoins come into existence. Any bitcoin that you send or receive was at one point somebody’s block reward.”
“Bitcoin has a monetary policy that was coded into the system right from the start that reduces the rate over time. […] There will still always be one block coming out every ten minutes, but the number of bitcoins handed out as a reward in each block will come down in sharp steps.”
“The event that will happen on Wednesday is exactly this; after block 210,000 hits, every block thereafter will have a reward of only 25 BTC instead of the original 50 [for approximately the next four years]”
“The second hypothesis is actually the one attacked more frequently: that the supply shock has not yet been priced into the market. [Detractors believe that] even if the supply of bitcoins coming into the market from miners will soon cut in half, the supply from traders [who’ve always known this was coming] will make up for it, and the price will remain roughly the same.”
“There is also another very profound change that will soon take place in the Bitcoin mining ecosystem: the introduction of the ASICs. ASICs, or ‘application specific integrated circuits’.”
“Thus we are going to see not just a reduction in revenue for Bitcoin’s miners, but also a shift in who Bitcoin’s miners are.”
- http://bitcointalk.org/index.php?board=57.0 (Further discussion of this topic)
Vitalik Buterin, writer for Bitcoin Magazine (@BitcoinMagazine), describes today’s rally that has taken the Bitcoin BTC/USD exchange rate above its high water mark from 2012. Excerpts:
“Today’s maximum of $15.68 at the time of this writing [is] the highest that the Bitcoin price has been since July 6, 2011.”
“The [network data] figures, which attempt to measure Bitcoin’s actual usage rather than public opinion or interest in the currency as search volume and all market statistics inevitably do, show the same pattern: the values rose during summer 2012, dropped off in the fall, but then began to quickly pick up again in November after WordPress started accepting the currency.”
“The 14-day average is also now as high as it ever was, and may well go even higher.”