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Latest News: Market Analysis - Will Bitcoin Block Size Increase Cause XBT's Next Price Move?

CAVIRTEX News

July 1, 2015, 2:29 p.m. - Market Analysis - Will Bitcoin Block Size Increase Cause XBT's Next Price Move?

bitcoin-block-size-and-price

One of the most heated conversations in bitcoin’s six year history has been playing out over the past few months, specifically addressing bitcoin’s scalability.

Currently, bitcoin’s design has a maximum block size limit of 1MB and an average time interval between blocks of just under 10 minutes. The average block size is projected to approach this 1MB limit by the end of 2016, which may prove problematic to the bitcoin’s growth under its current specifications. Once the 1MB block limit is reached, transaction confirmations can begin to take longer than the expected 10 minutes—and transactions may have to wait multiple blocks in order to be confirmed. This situation could, in turn, have an effect on the market price of bitcoin, which we will discuss later in the article.

Creating Solutions to the Block Size Limit

As the bitcoin community looked to solve the block size limit issue, an early proposal that gained popularity was to increase the block size limit to 20MB. A consortium of Chinese bitcoin mining pools, representing over 50% of the total network’s hashrate, quickly rebutted this idea however, with a proposal for an increase to 8MB instead. While the miners agreed that increasing the block size would allow for greater scalability, they also agreed that the jump to 20MB could lead to a significant increase in orphan blocks due to the increased data propagation time introduced by larger block sizes.

Some people in the bitcoin community have argued against block size increases altogether. These bitcoiners insist that this change may negatively impact the globalization and decentralization of bitcoin. A higher block size limit can act as a toll for international miners located in geographies with underdeveloped internet infrastructure, causing them to become less capable of handling the larger data bursts associated with large blocks. Small and "amateur" mining operations would also be negatively impacted as they would require more resources to support larger block sizes. An increase in the block size would not only act as an obstacle to miners but also to full bitcoin node operators.

There are alternative approaches that many believe should be considered. One suggested approach is a variable block size limit, a multiple of the trailing average block size. This would prevent the limit from growing too fast and enables flexible scalability. A proposed implementation of variable block size can be seen here. Another suggested approach is increasing the block frequency to less than 10 minutes. This would effectively increase the transactional capacity of the network without significantly increasing bandwidth strain. You can find a video discussing this idea here. Of all the proposals that are circulating, the solution that has garnered the most support is raising the block size limit to 8MB, with the limit doubling approximately every two years.

Block Size’s Impact on the Bitcoin Price

A change in the block size limit may have an impact on the bitcoin market–including bitcoin price.

If no changes are made the current 1MB block size limit, the value of bitcoin as a quick, international transactional system would decrease due to longer transaction confirmation times and reduced network reliability. By having less utility, the price of bitcoin could decrease as network usage declines. Longer confirmation intervals would also have a negative impact on most traders, including arbitrageurs, who may have trouble maintaining their current trade velocity on their limited capital. The result would be a less efficient market.

If the bitcoin block size limit is increased, various costs associated with mining will increase as well. This may cause miners with marginal profitability to cease operations, and would create a scenario in which it becomes more feasible to buy bitcoin versus mine it. Together, these forces could create a higher breakeven miner sell price and more buyers in the market–all leading to a higher bitcoin price. This could be intensified in the short term if miners cease operations and the difficulty level doesn’t adjust quickly. Finally, improved capabilities for the bitcoin network will lead to additional usage, which should also support price growth.

Conclusion: The Debate Continues

As it stands at the time of writing, there is no definitive, agreed-upon solution. That said, we greatly appreciate the hard work that the community has been tirelessly putting in trying to find one. We hope this brief summary of the topic brings more bright minds into the conversation!

June 8, 2015, 11:12 a.m. - Updated Cavirtex Pricing Schedules and Improved Order Book

Doing business as a bitcoin exchange is expensive...

Our company's goal is to ensure that Canadians have a reliable, sustainable bitcoin exchange that can serve our users for the long run. Our banking partners unfortunately charge bitcoin exchanges, including Cavirtex, high banking fees. While our banking relationship allows us to serve you with convenient bank transfer methods, it also adds costs that we have to cover in the course of our business. In line with these costs, we have made small adjustments to our EFT pricing and trading fees. Don't worry - they're pretty small.

Improved Customer Support and Order Book Liquidity!
Since our acquisition by Coinsetter, Cavirtex has seen many improvements take place. We have expanded our customer support coverage, which is now available 7 days a week. We have also brought new traders into the market to improve the exchange's order book liquidity, making Cavirtex the only source for deep bitcoin liquidity in Canada. Cavirtex offers substantially better prices on large trades versus our competitors.

Thanks for being a part of Cavirtex, which stands as the longest running bitcoin exchange in Canada. If you need help with anything, feel free to email our team at wecare@coinsetter.com!

Best,
Jaron Lukasiewicz
Cavirtex CEO

April 10, 2015, 12:06 p.m. - Cavirtex Acquired by VC-Backed Coinsetter

Coinsetter, the global bitcoin exchange based in New York City, announced this week the acquisition of Canadian Virtual Exchange, commonly known as CAVIRTEX, a major Canadian bitcoin exchange operating since 2011. The acquisition marks the first major consolidation in the bitcoin exchange market, and represents one of the largest M&A deals to take place in the burgeoning digital currency space.

Alongside its acquisition, CAVIRTEX today has reopened its doors to customers and resumed trading under Coinsetter’s leadership. Both exchanges will remain open for business in their own names, sharing technology, capital, management and banking access to maximize the value to traders. CAVIRTEX will move to employ Coinsetter’s technology stack, and incorporate their advanced security standards and practices. Previous account holders at CAVIRTEX and Coinsetter will continue to be able to use their existing login credentials at the same websites to access their accounts.

The acquisition was completed through a negotiated agreement with CAVIRTEX voting shareholders. Coinsetter chief executive Jaron Lukasiewicz has been named CEO of CAVIRTEX and Marshall Swatt will assume the role of CTO of CAVIRTEX, effective today.

Jaron Lukasiewicz, CEO of Coinsetter and CAVIRTEX said, “Coinsetter is proud to make Canadian bitcoiners a core focus of our company through CAVIRTEX, the most profitable and longest-running bitcoin exchange in Canada. Together we are making history, combining talent and resources to give clients an unparalleled BTC-CAD trading experience with a wide range of domestic bank transfer options, including a full banking relationship in Canada.”

Marshall Swatt, CTO of Coinsetter and CAVIRTEX added, “Traders have trusted Coinsetter since 2012 to provide the best combination of high speed trading technology, ironclad security and liquid markets. As we integrate Coinsetter’s CSX exchange technology into CAVIRTEX in the coming weeks, we will create an unparalleled Canadian bitcoin exchange with low latency trade execution, margin trading and growing interaction with customers through our Toronto office.”

For more information, visit the CAVIRTEX website at www.cavirtex.com or Coinsetter at www.coinsetter.com.

About Coinsetter:
Founded in 2012, Coinsetter is Wall Street’s leading global bitcoin exchange. Coinsetter’s New York-based exchange offers margin trading for businesses, the most established APIs for professional traders, high uptime, low latency trade execution, enterprise bitcoin security by Securicoin®, deep liquidity and attractive pricing. Visit www.coinsetter.com to learn more.

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