Bitcoin on the rise

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theanimal
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Re: Bitcoin on the rise

Post by theanimal »

EconTalk had a good episode recently discussing the use of bitcoin to combat hyperinflation in Venezuela. The government there heavily subsidizes electricity usage though, and that seems to be the only thing that allows it to work on a practical level.

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jennypenny
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Re: Bitcoin on the rise

Post by jennypenny »

Is this real or photoshopped? If it's real, it's very funny.

Image

BRUTE
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Re: Bitcoin on the rise

Post by BRUTE »

apparently real

bryan
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Re: Bitcoin on the rise

Post by bryan »

http://i.imgur.com/WSlxu1s.png

everyone hold onto their butts? That was the biggest swing in a while!

Dragline
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Re: Bitcoin on the rise

Post by Dragline »

Yeah, I think that guy actually got paid to hold up that sign. More on bitcoin sign guy: http://www.coindesk.com/bitcoin-sign-gu ... ty-secret/

It seems to me that all these crypto-currencies are like search engines circa 1999. Will bitcoin end up being "the Google" or will something else? Having a whole bunch of these things actually kind of defeats the purpose unless they become more directly interchangeable for each other. Crypto-arbitrage anyone?

I'm waiting for the HIghlander-style crypto show down: "There can be only ONE!"

BRUTE
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Re: Bitcoin on the rise

Post by BRUTE »

crypto arbitrage has been done for years. these markets are like the stock market, but 24/7 and everyone is a nerd - way more automated and efficient.

various blockchains, due to having different properties, actually already serve somewhat different purposes. Bitcoin is designed to serve about 5 transactions per second - not nearly enough for, say, cash transactions on a global level. Enough for background/interbank/Fed-type transactions, sort of as a backbone. Litecoin is designed to be faster and allow higher throughput - Eth is also faster, and additionally allows executing arbitrary code, becoming a quasi-cloud-in-the-blockchain. and those are just the top 3.

bryan
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Re: Bitcoin on the rise

Post by bryan »

You can arbitrage on the exchanges as BRUTE mentioned (pain to deal with so many alt-wallets or risk keeping money on exchanges) or use shapeshift.io (and pay the slippage and not-an-efficient-market tax). If I'm not mistaken the segwit stuff may enable (or be a pre-req for) cross/on-chain exchange? Or maybe I am confusing it with another addition.

Litecoin being "faster" is a bit of a misnomer since it takes about the same amount of time as Bitcoin for equivalent settlement probability assurance, though it does seem to have an obviously higher throughput.

Bitcoin is still your best bet for cryptos, for now. A few countries are dipping their toes, though. Bitcoin fans think too highly of some Bitcoin properties that they think give it its value (there is definitely some risk that something will eat Bitcoin's lunch and leave Bitcoin fans with nothing but crow).

Dragline
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Re: Bitcoin on the rise

Post by Dragline »

I feel like the barriers to entry for crypto-currencies are pretty low. A "Google-Coin", "Facebook-Coin" or "Amazon-Coin" could easily dominate the whole non-criminal side of this if those companies decided to jump in. But they might not want to deal with some of the tax headaches.

HIstorically, this resembles the way securities were traded in late 19th Century America, as chronicled in "Fifty Years in Wall Street" (1908).

Zeran
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Re: Bitcoin on the rise

Post by Zeran »

jacob wrote:
Sun Mar 12, 2017 7:17 pm
Wait what? If each transaction costs now 300 miles of driving in zombie electricity (what's that $25 of gas in the real world (outside SV)) ... surely that's going to impact the valuation of the "fancy transaction techmology" eventually even if it isn't presently clear to the bitcoin market participants. If bitcoin mainly serves as the equivalent of petrodollars in the [dark] economies that prefer to stay under the radar [in China], a $25 "Tobin Tax" for each transaction should materially and severely impact valuation, eventually.
That is not correct, media tends to talk about energy cost per transaction because it's simple and juicy sounding.
The Bitcoin network compensates at a rate of ~$4m a day to secure the network for the activity of "mining" (Which is not mining for bitcoins, it's providing security). The $4m a day mostly becomes electricity. Bitcoin is probably the most secure ledger on earth being secured thermodynamically. In a given block you can calculate how much energy was burned to create it and it can't be faked.

The relationship of energy cost is the cost to secure the total (Currently $42bn) value. It's similar to Gold vaulting fee's which are 0.12% of it's value per annum. Bitcoin costs ~4.5% of it's value per annum to be secured. If the Bitcoin network represented $420bn of value, the daily compensation would be ~$40m.

The Bitcoin network will attempt to consume as much electricity as it can - there is no supply & demand feedback with transactions & neither does energy consumption drop with increased hardware efficiency.

I think it's a potential environmental disaster, it currently uses 4-11 Terra-watt-H annually. For comparison Google uses ~2 Terra-watt-H annually, UK uses 314 Terra-watt-H. Bitcoin's usage is likely to grow by a factor of 10 or more, it's energy consumption will grow similarly. Potential 40-110 TWH energy consumption has me a little worried.

bryan
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Re: Bitcoin on the rise

Post by bryan »

You're a bit off since you don't mention mining to be reliant on the Bitcoin/USD exchange rate (i.e. a stable unit of account) and the cost per Wh. Those are the feedback mechanisms. I agree it's a big waste but I'm not too worried about it for the next few years; it might prove to produce an unexpected positive result that us humans are bad at predicting (but are good at producing bad results when we mean well).

I'm much more worried about all the politics, Bitcoin design growing pains and drawbacks, centralization (e.g. BTC-E is shut down recently, only a matter of time until a bitcoin mining operation like BITMAIN/AntPool is similarly charged with money laundering and it being frozen will slash Bitcoin transaction throughput), and competitors.

BRUTE
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Re: Bitcoin on the rise

Post by BRUTE »

Bitcoin currently (pre-fork) supports about 5 transactions per second. the network is already scraping that limit, and often, transactions are backed up. i.e. without massive changes to the protocol, it can't grow much more in terms of transaction volume. thus, a 10x growth in terms of transaction volume is highly unlikely in the near future.

it also seems incorrect that energy consumption doesn't decrease with increased hardware efficiency - isn't that what efficiency means? certainly the specialized chips used now use less energy than the old GPUs they were mining on back in the day, per hash?

Zeran
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Re: Bitcoin on the rise

Post by Zeran »

it also seems incorrect that energy consumption doesn't decrease with increased hardware efficiency - isn't that what efficiency means? certainly the specialized chips used now use less energy than the old GPUs they were mining on back in the day, per hash?
Yes modern chips are much more efficient. In simplest terms, the network pays $4m a day for electricity minus a 1-2% margin for profit. If you instantly made every chip 100x more efficient right now, mining profit would increase by a similar proportion, allowing people to deploy 100x the mining hardware until the margins return to being 1-2%. This puts you back to the same energy consumption as before. Mining efficiency has jumped by 100x, 1000x, 10,000x in different years, after each jump the energy consumption remains the same.
You're a bit off since you don't mention mining to be reliant on the Bitcoin/USD exchange rate (i.e. a stable unit of account) and the cost per Wh.
I didn't mention it, but it was accounted for. The network buys as much electricity as it can. If the price of electricity doubles, it buys half the amount of electricity and vice versa - without effecting the supply and demand for transactions. The point I was making at the end was that as the network $ value grows (as in each BTC represents more dollars) it can buy more electricity. After another 10x fold growth, the bitcoin network will be consuming 40-110 TWH of electricity. A 10x growth is reasonably likely in the next 2-3 years.

This is very different to a business consuming electricity & providing a product. If the price of electricity doubles, the product cost increases, lowering the demand for said product. They would buy less than half the electricity for a price doubling (or more likely go out of business).

only a matter of time until a bitcoin mining operation like BITMAIN/AntPool is similarly charged with money laundering and it being frozen will slash Bitcoin transaction throughput),
Miners don't effect throughput of transactions they provide security*. A single RasberryPi can handle all of the transactions in bitcoin (and likely more). The 11TWH of computing spread around the world is a security network. If Bitmain or Antpool disappeared nothing would happen to the network. It is robust by design against circumstances like that.

* massive change in hashing power could effect the rate are blocks are generated at until the next re-adjustment period.

Dragline
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Re: Bitcoin on the rise

Post by Dragline »

What will happen when all the bitcoin is mined and no one has any more incentive to use computers/electricity to support the network?

stayhigh
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Re: Bitcoin on the rise

Post by stayhigh »

Dragline wrote:
Fri Jul 28, 2017 8:53 am
What will happen when all the bitcoin is mined and no one has any more incentive to use computers/electricity to support the network?
Incentive will be confirming transactions for transaction fees.

Dragline
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Re: Bitcoin on the rise

Post by Dragline »

Who will pay the fees, how much will they be and how will they be collected?

Also, is this issue common to all crypto-currencies or just to bitcoin?

bryan
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Re: Bitcoin on the rise

Post by bryan »

@zeran, miners have an obvious affect on throughput. They are the ones putting through the transactions. You pointed at at the end specifically what I meant, that given that the current miners are operating at 100% uptime and the Bitcoin throughput is currently maxed out (1MB blocks), if 50% of the mining stopped contributing (e.g. mining on a different blockchain or seized or power goes out, etc) the time between blocks would go from 10m to 20m thereby cutting throughput in half until the next difficulty adjustment. Alt-coins have ways of handling miner volatility, for better or worse, often by fiat (hard fork).

Miners only provide "security" in the sense that it is costly to mine Bitcoin (i.e. attack it in the sense of re-writing history or gate-keeping transactions or making some nefarious activities a bit easier). Bitcoin security model in this sense could be replaced with Proof-of-Capital-Spent. There are obviously finer details but it comes down to that.

@Dragline, this was the big concern some years ago and will be into the future. It's been the root of some schism in the community (e.g. Hearn leaving). I always hand-waved the concern away by saying at some future point it will be clear to most people that the Bitcoin monetary policy and mining incentive is not sustainable and there will be a hard fork (else Bitcoin will lose market share to competitors). The issue is implementation defined for the most part. "Fees" are already built into the protocol (paid by someone with the private key crafting the transaction; miner that puts the transaction into the block can claim the fees of all transactions in the block). The Bitcoin developers and intelligent folks are basically of the mind that Bitcoin is now digital gold, not cash.

Zeran
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Re: Bitcoin on the rise

Post by Zeran »

50% of miners disappearing instantly is highly unlikely (we're talking asteroids here). The biggest miners have decided to split off and make a new currency. They have only have 0.25% of the network. Going back to what your were saying about Antpool/Bitmain getting raided. That would have no significant impact on transaction throughput.
Antpool - being a mining pool doesn't have many (if any) miners, it's where people point their hashpower. If the pool was closed due to legal action all the mining hashpower would point elsewhere.

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Seppia
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Re: Bitcoin on the rise

Post by Seppia »

A great piece on Bitcoin from Aswath Damodaran
http://aswathdamodaran.blogspot.ae/2017 ... f.html?m=1

stayhigh
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Re: Bitcoin on the rise

Post by stayhigh »

Dragline wrote:
Fri Jul 28, 2017 1:33 pm
Who will pay the fees, how much will they be and how will they be collected?
https://en.bitcoin.it/wiki/Transaction_fees
https://bitcoin.stackexchange.com/quest ... be/895#895

But all that will happen in 2140, so nothing to worry about for us.

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GandK
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Re: Bitcoin on the rise

Post by GandK »

A good beginner's/nontechnical bitcoin podcast: Glenn Beck interviews Wences Casares, the CEO of Xapo.com, one of the larger Bitcoin wallets. The whole hour is great conversation about Bitcoin, global currencies generally, and Casares' childhood in Argentina with all the govt currency manipulations he saw. (If you're not a Beck fan generally, have no fear... this hour is US-politics-free.)

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