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Remind me again ... (or tell me if this is fundamental noob stuff and that I should know better and go study on my own):

I've seen comments that each bitcoin transaction requires enough energy to run a US household for seven days. How was this figure arrived at? Does it really require that much energy or is this a "ghettoed" number that was arrived at by dividing the electricity costs of mining with the actual number of transactions (which I suppose is low).

tl;dr - Suppose the cost of electricity 3x'ed or 10x'ed in the future. Now, we already have a bunch of mined coins that we paid for in computing power because they are really hard and increasingly hard mathematical problems. But what about those transaction costs? Could we end up in a situation where bitcoins (and blockchains in general) become stranded assets because they're too expensive (in energy) to transact. Asking in another way, can you [still] perform a transaction on a Commodore64 or an HP48SX? Or is the viability contingent on maintaining a high performance network of computing power?

brute doesn't know where the "seven days" number comes from, but it sounds oversimplified.

there are currently (AFABK) two mechanisms of securing blockchains: proof of work, and proof of stake.

proof of work is the original Bitcoin mechanism. it basically requires computers to solve increasingly complex mathematical puzzles by guessing hashes. this requires tons of computing power.

proof of stake is more like vote-by-land-owners, it simply requires cryptographic proof of asset (e.g. coin) ownership to vote for consensus. this method underlies some alt-coins, and some of the major ones (e.g. Ethereum, the current #2/3 alt-coin depending on day of the week) is planning to switch over from proof of work to proof of stake some time soon.

there are debates if stake is as secure, "no such thing as a free lunch", et cetera.

if computing costs rise, proof of work could indeed become too expensive to be worth it. but then again, that is true for all payment mechanisms. it costs money to ship gold - one of the major reasons very few humans use gold for international transactions. building giant skyscrapers, heating them, and hiring bankers also requires money. theoretically, the costs of maintaining/facilitating any currency could rival its benefits, making it useless.

[edit]

regardless of the current speculation/bubble/gold rush qualities that cryptocurrencies have, brute thinks that they will do to the banking industry what social media did to the news and email to the postal service. it might not be Bitcoin, just like it wasn't Friendster or Myspace that eventually won out. some players will likely adapt, or even take large shares of the new market. but brute thinks it will fundamentally alter how humans transact with each other, this time not just with likes and letters, but in commerce and all other things money.

How is proof of stake different from the existing financial system?

it still works on a blockchain. the value-add of a blockchain is that several parties can reach consensus and avoid double spending without having to resort to one central authority (FED, courts). in effect, the protocol becomes the authority, and whoever disobeys it will be ostracized. in a way it is a self-enforcing democracy, where Dear Leader jacob's money is only accepted if he also accepts the money of others, preventing him from printing more.

But given proof-of-stake the administrative costs become the same and the primary difference is whether I(*) trust a central authority or a distributed one?

(*) "the average person"

yes, the rest is more incremental improvement than qualitative difference.

Dear Leader jacob will not have to trust the receiver of the money (unlike with credit cards), fees can theoretically be much lower than anything in existence (currently not true for all crypto currencies), transaction time can be quasi-instant (some have seconds, some have minutes, some have days), and it works regardless of country/nationality/banking system, plus it potentially cuts out all the middle men (kind of like cash).

brute is actually quite convinced that proof-of-stake has much lower admin cost than existing currency systems, and isn't convinced that proof-of-work is actually more expensive. Bitcoin Cash and Ethereum transaction costs are in the fractions of the penny, and so was Bitcoin's a few years ago. since then, transaction costs for Bitcoin have increased due to internal politics, not for technical reasons.

if transactions cost fractions of pennies, are the miners eating all those electricity bills out of charity? brute isn't convinced.

jacob wrote: ↑

Wed Dec 20, 2017 12:37 pm

...they are really hard and increasingly hard mathematical problems....

I think that's the untrue part. The difficulty is adjusted every x number of transaction blocks so that on average it takes about 10 minutes to solve the problem and verify the block of transactions. The increasing energy use comes from competition to be the first to solve it since right now, presumably, the reward in bitcoins is greater than the cost in energy.

https://en.bitcoin.it/wiki/Proof_of_work

BRUTE wrote: ↑

Wed Dec 20, 2017 3:57 pm

if transactions cost fractions of pennies, are the miners eating all those electricity bills out of charity? brute isn't convinced.

No, which is why miners are congregating in countries with low/no energy costs to consumers. Someone (econtalk?) did a podcast on the miners in Venezuela using the 'free' electricity.

disparatum wrote: ↑

Wed Dec 20, 2017 4:07 pm

jacob wrote: ↑

Wed Dec 20, 2017 12:37 pm

...they are really hard and increasingly hard mathematical problems....

I think that's the untrue part. The difficulty is adjusted every x number of transaction blocks so that on average it takes about 10 minutes to solve the problem and verify the block of transactions. The increasing energy use comes from competition to be the first to solve it since right now, presumably, the reward in bitcoins is greater than the cost in energy.

it probably depends on perspective. the energy cost for mining 1 bitcoin or 1 block does increase, because more hashes have to be calculated at higher difficulty. but the higher difficulty is put in place because hashing became too fast, which in turn was caused by increased hash power in the network, which, amongst other things, is driven by competition and increased efficiency and invested capital.

so the energy cost to verify a block does go up, but not "exponentially over linear time", unless hash power is added forever. point being it's not an inherently self-exploding system, but a self-balancing system that responds to external inputs by putting a damper on.

If a mother known for her silliness wished to give her adult children a token gift of some particularly alternate version of alternate currency (one nobody has heard of,yet might just possibly survive/thrive) in lowest possible denomination, how might she best go about this?

that could be a bit of an effort, since (by definition), the rare alternate coins aren't necessarily being traded on the biggest exchanges. in addition, very few exchanges currently accept USD - brute thinks it's only Coinbase/GDAX. for the others, some crypto currency must be paid in (e.g. Ethereum/Bitcoin/Bitcoin Cash) and then used to trade to less well-known ones.

thus 7Wannabe5 could buy some Eth/Btc/Bch on Coinbase/GDAX with USD, then send it to another exchange (brute can't recommend a favorite, though he definitely recommends against bitfinex which is supposed to crumble any minute now), then buy the alt-alt-alt-coin there.

maybe easier to just give the kids some Ethereum, assuming they haven't heard of that? that could be bought directly off Coinbase/GDAX.

for clarification: Coinbase and GDAX are made by the same company. Coinbase allows customers to buy coins from them. GDAX is an exchange that facilitates trades between customers. Thus, typically, Coinbase is more expensive (commission) but more convenient, whereas GDAX allows trades with much lower commission, but requires customers to post market/limit orders and wait for order fulfillment.

I had almost talked myself into buying into LTC when
Litecoin founder sold all of his LTC.

How is this cryptocraze any different than a MLM multilevel marketing scheme which has no product at its center. In instances where there is a product, it is marginally different (!= better) than alternatives but with a higher mark-up. Only way LTC is different from BTC is it takes 2.5 minutes for a block against BTC's 10 minutes and that there are 84 million of them.

In many cases, the structure or hierarchy is in and of itself the product that is being sold. In this regard the cryptocraze is comparable to the affiliate marketing/MLM softwares that people use to promote their softwares products/services/whatever.

In terms of utility, the LTC website says BTC is for big purchases while LTC is for smaller purchases.

But a lower denomination of the same currency can be and is generally used for smaller purchases.

Genuine questions from someone who is probably the village idiot here (and still should introduce himself "properly") when it comes to such subjects: What would potentially be the impact of a globally existing currency, such as BTC et al., outside the regulation of national/regional bodies usually "issuing" (not sure if that is correct terminology) currencies, on national/regional economies? If there is potential for a severe negative impact, would that not probably lead to a prohibition/strong regulation of such alternative currencies at national/regional level?

@snail - You can check out popular books like James Rickards' "The Death of Money" for some ideas on how that scenario might play out. It's speculative crystal-ball stuff so try not to take it very seriously. Draw your own conclusions.

Long Island Iced Tea Corp. shares rose as much as 289 percent after the unprofitable Hicksville, New York-based company rebranded itself Long Blockchain Corp. It’s the latest in a near-daily phenomenon sweeping the stock market, where obscure microcap companies reorient to focus on some aspect of the mania sparked by bitcoin’s almost 1,500 percent rally this year.

https://www.bloomberg.com/news/articles ... blockchain

7Wannabe5 wrote: ↑

Thu Dec 21, 2017 9:07 am

If a mother known for her silliness wished to give her adult children a token gift of some particularly alternate version of alternate currency (one nobody has heard of,yet might just possibly survive/thrive) in lowest possible denomination, how might she best go about this?

For Bitcoin, there was a website https://bitcoinpaperwallet.com that you can download and use while not connected to the internet (ideally on a trusted computer) to generate paper wallets (print the private keys) and fund them. The website makes money from selling stickers and holograms you can use to make the paper wallets more attractive.

Not sure if there is anything turnkey like these for obscure alts. In the end you would more likely be left w/ generating the alt priv keys and public addresses on a PC and taking those numbers and photoshopping/printing them onto whatever gift form you desire. You would generate the priv keys, address with some lightweight wallet like https://coinomi.com/

Knowing that you don't already use BTC et al, it's probably easiest if you ask someone you know is already involved and trust to do it for you. Basically you would be in charge of designing the wallet and generating the priv keys, public address then the other person can send you the coins to that public address from an exchange. I volunteer.

As for small cap coins.. I've heard different names get tossed around but haven't looked into the really small cap stuff. So I'm not really sure which are scams or ill-advised or actually diamonds in the rough. For large/mid-cap I hold some Monero, Zcash, Ethereum, LiteCoin... available coins: https://coinmarketcap.com/exchanges/bittrex/ or https://coinmarketcap.com/exchanges/bitfinex/ etc (and remember more than a majority of these are imo worthless!)

fiby41 wrote: ↑

Thu Dec 21, 2017 12:04 pm

How is this cryptocraze any different than a MLM multilevel marketing scheme which has no product at its center. In instances where there is a product, it is marginally different (!= better) than alternatives but with a higher mark-up. Only way LTC is different from BTC is it takes 2.5 minutes for a block against BTC's 10 minutes and that there are 84 million of them.

In many cases, the structure or hierarchy is in and of itself the product that is being sold. In this regard the cryptocraze is comparable to the affiliate marketing/MLM softwares that people use to promote their softwares products/services/whatever.

In terms of utility, the LTC website says BTC is for big purchases while LTC is for smaller purchases.

But a lower denomination of the same currency can be and is generally used for smaller purchases.

How is the economy or various other sub-markets different than MLM scheme, even?

LiteCoin main differences to Bitcoin is in the governance (similar to Ethereum or other newer projects.. centralization risk but also ability to innovate faster than Bitcoin) and lack of Satoshi coins. As you said the block times are faster (though if you look at the security model, it means you still need to wait 60m to have the same guarantee as 60m of Bitcoin) and the PoW is different so Bitcoin miners are not at all economic. There are other differences, but for the most part LTC is just a copy-cat with some tweaks and buy-in. With Bitcoin fees/throughput issues it makes others like ETH/LTC more valuable for medium of exchange use-cases..

SnailMeister4000 wrote: ↑

Thu Dec 21, 2017 1:48 pm

Genuine questions from someone who is probably the village idiot here (and still should introduce himself "properly") when it comes to such subjects: What would potentially be the impact of a globally existing currency, such as BTC et al., outside the regulation of national/regional bodies usually "issuing" (not sure if that is correct terminology) currencies, on national/regional economies? If there is potential for a severe negative impact, would that not probably lead to a prohibition/strong regulation of such alternative currencies at national/regional level?

@SnailMeister4000, you will have to figure it out for your own if you think they are "good" or "bad" or to what extant on what vector. There is clearly the potential for severe impact. Yes, eventually governments would "prohibit" them (i.e. like drugs) unless it is in their strategic interest or they are lobbied, demanded to do the opposite. Of course Bitcoin et al is designed to not be easily seized or censored which is why they have actually been sticking around so long.. basically Napster vs BitTorrent. You can probably stop BitTorrent or the drug trade, etc, but mostly it persists.

jacob wrote: ↑

Wed Dec 20, 2017 12:37 pm

Remind me again ... (or tell me if this is fundamental noob stuff and that I should know better and go study on my own):

I've seen comments that each bitcoin transaction requires enough energy to run a US household for seven days. How was this figure arrived at? Does it really require that much energy or is this a "ghettoed" number that was arrived at by dividing the electricity costs of mining with the actual number of transactions (which I suppose is low).

tl;dr - Suppose the cost of electricity 3x'ed or 10x'ed in the future. Now, we already have a bunch of mined coins that we paid for in computing power because they are really hard and increasingly hard mathematical problems. But what about those transaction costs? Could we end up in a situation where bitcoins (and blockchains in general) become stranded assets because they're too expensive (in energy) to transact. Asking in another way, can you [still] perform a transaction on a Commodore64 or an HP48SX? Or is the viability contingent on maintaining a high performance network of computing power?

I do think it is something you should look into on your own if you want to get into alternative monies.

The energy used is just an economic/investment equation. Bitcoin* could work in an apocalypse scenario where there is much less total energy available. It's all on the margin and dynamic. If the price of Bitcoin continues to rise, miners will continue buying more mining equipment and consuming more energy.

I've mentioned elsewhere that this may be a good or bad thing..

[*] Bitcoin is the oldest PoW algorithm.. so lacks a lot of dynamic or finer-grained static adjustments. Alts seem to have algorithms that better respond to swings in mining supply/demand to maintain the throughput of the network. For instance Bitcoin does the difficulty adjustment every 2016 blocks ~14 days.. so you could have a worst case where e.g. 60% of the mining goes offline and the blocks decrease from 10m to 25m until 35 days later when it adjusts back to 10m. Electricity has nothing to do with any of this other than as a cost (so you need to know the mining economy to do any calculations as to how changes in "energy costs" play into Bitcoin etc).

Bitcoin does look like it will have stranded coins (you mentioned Tobin Tax earlier, which is true) if things don't change for the better (thus taking away arguments about largely divisible coins). Bad imo.. though it has been re-branded as digital gold and development happening to build layers of money on top of this digital gold.

Settling transactions (mining) is what requires work, not making transactions. Pedantic, same difference, maybe.. but worth pointing out for noobs. So you can always easily make a valid BTC transaction on a RasberryPi, but the assurance that that transaction has settled (and not double-spent) takes time and energy. I already mentioned that you could still mine w/ less energy and efficient HW, but I also pointed out the Bitcoin does not handle the adjustments very quickly (so it could be that under certain scenarios like a sudden change in mining capability, something like LiteCoin or Bitcoin Cash becomes the economic choice to mine instead of Bitcoin... spiral of death).

jacob wrote: ↑

Wed Dec 20, 2017 3:07 pm

How is proof of stake different from the existing financial system?

I also agree w/ BRUTE that PoS makes a lot more sense than PoW. PoW is in many ways an abstraction of spending capital.. Crypto-coins are already synthetic value so why not just make their mining synthetic as well? Unfortunately "useful work" like folding proteins doesn't work since verifying that work takes as much work as the work itself (Bitcoin and other PoW coins, it is very hard to solve/mine but very easy to verify).

Proof of Stake is locking your coins from being spent to enter into the lottery, basically. So the more capital you have to stake the more likely you win the lottery. Proof of Burn is the same except you actually burn the capital instead of just putting it on the sidelines for a set amount of blocks/time.

There are other solutions as well. For instance a democracy/identity mining/lottery scheme, that I think many economists that hate Bitcoin et al would love, is possible that I am on the lookout for or might do a PoC myself eventually. Bram Cohen ("Chia", inventor of BitTorrent) thinks storage space and time servers is possible.. But it remains to be seen if anything can guarantee security/risk is at least as good as Bitcoin.

And obviously permissioned blockchains work, but they rely placing trust in central party say-so, basically, instead of simply accumulated proofs of value destroyed like Bitcoin. Great if being trust-less isn't the end all in the scheme (e.g. you could have Co-op coins or APPL coins or whatever you want).

I've always thought 1000 flowers will bloom... except if there really needs to be a universal money.

@fish et bryan Thank you!

I am still looking for something helping me understand the "big picture". For example , there have been "impact studies" before the introduction of the EURO as cimmon currency in the Euro zone withinthe EU (how they were taken into consideration is a different topic). Is there no publily available analysis by governmental bodies so far on the potential impact of "universal, global, digital currencies" (again I am not sure about correct terminology) in national/regional economies? Isn't this the elephant in the room, or am I nout understanding it?

I think I've read some smaller takes on it from various economists. Maybe just google <economist name> + Bitcoin for their take. Of course, similarity to gold money means a lot of that analysis (i.e. inability to alter supply of money) _may_ be valid. Be careful though, a lot of them are just hot takes from a place of ignorance and not actual analysis. Yanis Varoufakis thinks money will always be political and controllable. He is in favor of a DemocraticCoin like I suggested earlier.

For the most part, governments won't acknowledge it, supposedly to avoid the Streisand Effect. Though some central banks have papers dealing with digital currencies/money (since the 90s) that they are still the issuers/controllers of. This isn't really the same, of course.

As you say, it's an elephant in the room so best not bring attention to it. Estonia has plans for an estcoin that they say is not a currency but.. it's a currency (unkown how it will be implemented).

Charlie is not a fan
http://www.valuewalk.com/2017/12/charli ... fett-2017/
Full interview here
https://youtu.be/S9HgIGzOENA

Like-kind of exchange of cryptos no longer allowed: https://www.bloomberg.com/news/articles ... r-gop-plan

Haven't seen the exact text..