Bitcoin halving

A political message, temporary spike in fees, and higher centralization

Bitcoin’s third block reward halving happened on May 11 with a secret message embedded in the penultimate block #629,999 mined by F2Pool. The message says: “NYTimes 09/Apr/2020 With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue”. This refers to the genesis block, which also contained a political message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

After the halving, there have been no abnormal price swings, nor network-halting congestion. However, the average Bitcoin transaction fee continued climbing up, and hit $6.6 per transaction on May 20, the highest level in two years.

Bitcoin mining profitability has plummeted due to the decrease in the mining reward from 12.5 to 6.25 BTC per block. As a result, some miners turned off their old hardware, which led to the decrease in the network’s total hashrate and thus longer times between blocks. This expanded the size of the mempool and increased competition among Bitcoin users for their transactions to be included in new blocks, causing transaction fees to spike.

On May 18, more than 51% of Bitcoin’s network total hashrate was controlled by only 3 mining pools: F2Pool, and AntPool. These pools have historically controlled a large portion of the network hashrate, but their contribution rarely exceeded the 50% mark, especially after the rapid rise of Poolin pool in 2019. This recent centralization can be explained by the fact that large miners were better equipped with newer and more efficient hardware to tolerate the block reward halving.

Redditors speculate that the actual number of entities that control more than 51% of the total hashrate fell to two, because the AntPool and mining pools are owned by Bitmain, the largest China-based crypto mining hardware manufacturer. Historically, most Bitcoin miners are located in China.

Telegram vs the SEC

The TON is dead, long live Free TON!

After 2.5 years of development, Telegram announced the shut down of its TON project, which raised $1.7 billion in 2018 from high-profile investors. The launch of TON was scheduled for October 2019, but was delayed multiple times because the U.S. SEC sued the company for allegedly selling unregistered securities. Pavel Durov, CEO and co-founder of Telegram, eventually decided to drop the project and blamed the U.S. regulators in a blog post titled “What Was TON And Why It Is Over”.

American investors can only take back 72% of their investment, while other investors can loan the funds to Telegram for one year and get back 110% in April 2020. Some investors are considering to file a class action lawsuit in the hope to get Telegram’s equity, since $405 million from the $1.7 billion token sale was spent to develop both the TON blockchain and Telegram’s messaging app.

In May, TON Labs independently launched Free TON, which is a fork of the original open-source TON project. Pavel Durov stated that “no present or past member of our team” is affiliated with any networks based on TON technology.

In other news

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