[HN Gopher] Bitcoin Halving Just Occured
___________________________________________________________________
Bitcoin Halving Just Occured
Author : 3ds
Score : 381 points
Date : 2020-05-11 19:32 UTC (3 hours ago)
(HTM) web link (www.blockchain.com)
(TXT) w3m dump (www.blockchain.com)
| lalaland1125 wrote:
| There is a quite a bit of incorrect economic analysis in this
| thread and elsewhere. In a rational market the halving should
| have no impact on the price of Bitcoin because it's a well known
| event that should have already been priced in.
|
| It's totally possible that the price might go up, but the reason
| for that rise would be the irrational behavior of other market
| participants and people should acknowledge that.
| AndrewKemendo wrote:
| For others commenting here, "rational" is an economic term of
| art, not the way you use it in day to day life.
|
| _Rationality, for economists, simply means that when you make
| a choice, you will choose the thing you like best.1 This is
| very different from the way we normally think about
| rationality. Usually when we talk about rationality we use it
| to mean sensible, or reasonable. To economists--as long as
| you're doing what you want given your situation, you're acting
| rationally._
|
| [1]read.hipporeads.com/what-an-economist-means-by-rationality/
| TimTheTinker wrote:
| _Rational market_ - that 's an oxymoron if I ever heard one.
|
| Yes, current prices include anticipated future events (or at
| least speculation on those events, as well as anticipated
| behavior of market participants based on those events, yada
| yada), to an extent. What prices _can 't_ anticipate is the
| behavior of market participants at any point in the future,
| _much_ of which will be irrational; or the events in future
| history that may or may not trigger that behavior.
|
| Yes, there is alpha to be gained based on data
| collection/processing -- things like news, weather, twitter,
| satellite images of traffic or parking lots, etc. The more you
| know and can effectively analyze that other market participants
| don't know or can't effectively analyze, the better. But no one
| really knows the future, only what traders are statistically
| likely to do in the near future based on current events.
| sillysaurusx wrote:
| _rational market_
|
| Perhaps this is glib, but it's worth remembering that bitcoin
| isn't a rational market. At no point in its history has the
| market reacted rationally to any event.
|
| It only appears rational in hindsight, if at all. But
| "rational" implies a causal link between an explanation and a
| subsequent event. Those explanations almost never turn out to
| be true.
| economicslol wrote:
| Is the actual market really any better? Seems a strange
| position to take.
| enumjorge wrote:
| But the top-level comment isn't a comparison between the
| bitcoin and regular markets. It made a statement of the
| form 'assuming X, Y must be true'. The parent comment
| pointed out assumption X is not valid, so we can't conclude
| Y is true.
| null0pointer wrote:
| You just described every market
| thaumaturgy wrote:
| Physics has spherical cows and economics has rational markets.
| economicslol wrote:
| But spherical cows are actually reasonable approximations.
| Economics is astrology hiding behind dense math to parade as
| a science. It is not.
| freefriedrice wrote:
| The "rational market" are things like bluechips and
| bellweathers. Coke, Pepsi, Target. They follow traditional
| rules, e.g., valuation, price-to-earnings, capital, dividends,
| etc.
|
| BitCoin is gambling where big players intentionally alter the
| price and small players hope to sap some $$$ like fleas on a
| dog.
| [deleted]
| hudon wrote:
| Why have a "halving" every four years, you may ask?
|
| Having a periodic "The Halvening" ritual every four years allows
| Bitcoiners to reconcile and forgive each other's trespasses for
| one, it also gives Bitcoin a nice bump of attention in the media
| and on social media, and finally it gives the Bitcoin High
| Priests an opportunity during the ritual to re-iterate the
| Bitcoin Commandments (eg. "Thou shall worship fixed monetary
| supply" and "thou shall not worship other consensus rules"). All
| this strengthens the community, and thus, the consensus, and a
| strong consensus is part of the main selling point: to get filthy
| rich.
| shobith wrote:
| I don't like Bananas. Instead of just not buying them at the
| grocery store and not eating them, I'll post a negative comment
| whenever someone mentions Bananas.
|
| Bananas are bad for you! Bananas suck! Bananas are a scam!
| hudon wrote:
| I'm providing a sociological hypothesis for something that
| people usually only provide technical explanations for. If
| you have a credible sociological explanation for why Bananas
| are purchased that is unrelated to nutrition, please share!
| 101404 wrote:
| So?
| unhashable wrote:
| Miners block rewards will be reduced in half from 12.24 BTC to
| 6.12. In theory this reduces overall sell pressure on BTC in a
| key time when Bitcoin's narrative is maturing and adoption is
| moving forward with institutions.
|
| When Central Banks throughout the world are printing unlimited
| fiat, there is no better time to hold the universe's scarcest
| asset.
| thinkmassive wrote:
| Your numbers are close but I'm not sure where you found them.
| The subsidy went from 12.5 to 6.25. It started at 50, and
| it's reduced by a right bit shift ("the halving") every 210k
| blocks:
|
| https://github.com/bitcoin/bitcoin/blob/0.19/src/validation..
| ..
| orwin wrote:
| The issue with a deflationary money is that it reduce
| exchange rate (you try to hog as much as you can), thus
| reducing GPD. That's an issue for everyday money (and why the
| dollar was decorellated from gold).
|
| I think the blockchain is a good idea, even as a simple money
| ledger, but the scarcity BTC holders praise is an inherent
| issue that will make bitcoin less and less usefull as a
| currency, and while the price will probably stay high for the
| foreseeable futur, i think BTC won't ever be adopted by
| institutions, at least not long-term.
|
| Other cryptocurrency that don't have the deflationary issue
| might be adopted officially though though (but, the future is
| uncertain)
| krustyburger wrote:
| Calling Bitcoin the universe's scarcest asset is laughable.
| Leaving aside the hyperbole of invoking the "universe" to
| rank the scarcity of something terrestrial, there are many
| conventional assets that are scarcer than Bitcoin, like
| Picasso paintings or mansions in Bel Air. Lastly, Bitcoin is
| not even the" scarcest" cryptocurrency.
|
| Even if you stand to gain if Bitcoin's price increases, you
| should not be trying to generate hype for it here on HN.
| leorio wrote:
| scarcity is determined by demand not supply.
| lgl wrote:
| This! Also ironic that the currency that would
| ideologically only bring benefits to the unbanked is now
| largely held and controlled by bank-like institutions and
| the crypto equivalent of the top 0.1% since most bitcoin is
| held in a very small amount of wallets.
|
| Its premise is now basically to replace one shitty system
| for another shitty system but one that's unregulated and
| powered by memes and waste of electricity.
| shse wrote:
| What about other cryptocurrencies?
| empath75 wrote:
| the idea that any crypto currency is scarce is nonsense. It
| is only scarce by convention, so long as traders decide that
| one particular block chain is the One True Blockchain. There
| are many forks of bitcoin, as well as many other
| cryptocurrencies. If it ever becomes financially worth while
| for a group of people to turn on the bitcoin money spigot
| either through forking or launching a new cryptocurrency, it
| _will_ happen, and the value of bitcoin could evaporate over
| night. It's trivially easy to launch a new cryptocurrency as
| we saw in the last bubble.
| nullc wrote:
| _Everything_ is only scarce "by convention". By convention
| we don't call also silver "gold" and treat the two metals
| as equivalent for money-like purposes, though we could--
| just like people could by convention choose to adopt some
| radically incompatible system and call it Bitcoin, but they
| don't and likely won't.
|
| Critically though, no one can force you to adopt a fake
| bitcoin. True, you wouldn't be very happy being the last
| holdout on the real thing due to network effects-- but even
| there you could still hold on if other people were
| stupid... and that's about any strong and independent as
| anything used as a money ever could be, because money
| inherently gets its value from network effect.
| brokensegue wrote:
| > the universe's scarcest asset
|
| So like Americium? Or maybe antimatter?
| birdyrooster wrote:
| There is a finite amount of gold and it's a lot less likely
| to stop being useful in the future for many many high tech
| uses.
| unhashable wrote:
| I do not know how much gold is in the earth's crust or in
| passing asteroids, but I do know how many Bitcoin there
| are: 21 million.
|
| https://aidaily.co.uk/articles/artificial-intelligence-
| and-s...
| AnimalMuppet wrote:
| "The universe's scarcest asset"? That would be unobtanium;
| there is no supply of it whatsoever. ;-)
|
| But how do you measure "scarcest"? Hardest to develop new
| sources? Is the year-over-year increase in bitcoin smaller
| than in gold? (Year-over-year because that gives a measure of
| how hard it is to create/find more of the asset, which seems
| a decent measure of "scarce".)
| not2b wrote:
| Central banks don't print unlimited fiat, they strike a
| balance between inflation and deflation. Anyone thinking that
| they can "print unlimited fiat" winds up like Zimbabwe.
| "Print" too much, and there's inflation. Too little, and
| there's deflation. But most money isn't printed, it's just
| balances on bank statements; the central banks control the
| money supply by regulating banks. With Bitcoin, there's no
| intelligent control, just rules that produce deflation,
| meaning it might be attractive as an investment but it
| doesn't work as currency.
| ur-whale wrote:
| For complete Bitcoin newbies, it is perhaps worth noting that
| while newsworthy, this event is not like an earthquake or a stock
| market crash as it does not come as a surprise to anyone:
|
| This event was (modulo + or - a month) pre-determined from the
| very first day bitcoin was launched (and so is the next halvening
| and the one after that).
| jameslevy wrote:
| Is there speculation regarding what miners will do instead of
| mining Bitcoin? For example, mining another cryptocurrency
| instead of Bitcoin? This would seem to have implications for the
| mining power for these altcoins, and perhaps implications for
| their prices as a result. I haven't seen any discussion about
| this.
| DarthGhandi wrote:
| Bitcoin miners have asics built to crunch sha256. There's not
| many alternatives to mine.
| vmception wrote:
| It balances itself out. a portion of the miners leave making it
| proportionally more profitable for the remaining miners, or
| they upgrade to more efficient hardware reducing their power
| costs to mine the same amount of bitcoin, or the price doubles,
| or a combination of all of the above.
|
| during some periods of time the price falls and it takes longer
| for all of that to happen, with existing miners being slowly
| replaced by more well capitalized miners
| jameslevy wrote:
| Sure, but presumably the miners leaving will still want to do
| something profitable with their mining equipment. I'd expect
| to see the hashrate increase for other PoW coins. Unless
| there's some reason for that not to happen.
| vmception wrote:
| There is a market for coins with the same hashing
| algorithm, specifically to attract miners that can't do
| anything on the bitcoin blockchain.
|
| They are all useless and don't have exchange rates to
| justify the electricity cost. You can launch a new one
| given the assumption that this is many miner's first
| halving.
|
| The price to yield to electrical cost market is pretty
| efficient, rarely a long lasting advantage there.
| Animats wrote:
| So what happened? Did the price go up or down?
|
| Bitcoin fans claims the price should go up. Conventional
| financial wisdom is that the price of something contains expected
| future events, so the price should remain the same.
| gjs278 wrote:
| lol the guy who thinks he is smarter than the bitcoin fans
| can't figure out how to check the price. a 5 year old could do
| it.
| bouncycastle wrote:
| Looks like it's a non-event.
|
| Ethereum launching their "ETH 2.0" and transitioning to staking
| will be a bigger event in the crypto space later this summer!
| chrisshroba wrote:
| Will this likely increase typical transaction fees to make up for
| block reward?
| ur-whale wrote:
| Transaction fees follow supply and demand for blockchain space.
|
| They haven't been correlated to block reward AFAIK.
| miguelmota wrote:
| Transaction fees are driven by transaction volume. The more
| congested the network, the higher fees will be because there's
| a limit to how many transactions can fit in a block. If there's
| normal transaction volume on the network then transaction fees
| will remain the same. Miners can choose to reject any
| transactions but equally they'll also be miners who accept any
| transaction.
| empath75 wrote:
| At zero block reward, who pays for mining?
| kinghajj wrote:
| Transaction fees.
| [deleted]
| ajkdhcb2 wrote:
| In the long term yes the halving schedule must lead to huge
| fees (eventually there will be zero inflation). As inflation
| decreases, miners have to be paid by fees to secure the
| network. Otherwise the security collapses.
| gridlockd wrote:
| The fees are paid by the users of the network, if the demand
| on network transactions is low, there will be little reward
| for mining.
|
| This means that without sufficient demand for transactions, a
| majority of miners would have to abandon the network, which
| would indeed put network security at risk.
|
| Therefore I predict that the miners will make the supply of
| Bitcoin unlimited, should that situation occur. They already
| got their way with keeping the Bitcoin block size fixed,
| which kept transaction fees high.
| lalaland1125 wrote:
| No. There is no causal relationship between the two.
| Transaction fees are driven by usage in that they increase the
| more the network is over capacity. Miners cannot "demand" more
| fees as the supply is inelastic.
| TheRealPomax wrote:
| I have no idea what that means, and the page itself is a ledger,
| not anything to explain what that means.
| saltking112 wrote:
| Can someone explain to the uninitiated what halving is?
| iamharishsingh wrote:
| Is is safe to invest in bitcoin now?
| ExtraServings wrote:
| as safe as it ever was
| haakon wrote:
| It's never safe to invest in Bitcoin.
| waiseristy wrote:
| It probably more accurate to say that one gambles in Bitcoin
| Mojah wrote:
| For anyone interested in the code behind the halving, I had some
| fun dissecting the GetBlockSubsidy() function that takes care of
| halving & ending of block subsidy [1].
|
| It continues to amaze me that I struggle to set up a 5-node
| database cluster without one going out-of-sync or split-braining
| every few weeks, yet the bitcoin network manages to keep
| thousands of miners in-sync. This has to be the best example of
| eventual consistency in a production network.
|
| [1] https://ma.ttias.be/dissecting-code-bitcoin-halving/
| enether wrote:
| This is why Blockchain is such an elegant solution to
| distributed consensus.
|
| I prefer calling it a distributed mechanism for _emergent
| consensus_. Consensus is not achieved explicitly - there is no
| election or fixed moment when consensus occurs. Instead,
| consensus is an emergent product of the asynchronous
| interaction of thousands of independent nodes, all following
| protocol rules.
| liquidify wrote:
| Miners will now receive 6.25 bitcoins per block.
| X6S1x6Okd1st wrote:
| Anyone have any news on if any major miners have said if they are
| going to be switching away from BTC for the time being?
|
| As of 10 blocks past halving it doesn't look like total hash
| power has decreased much.
|
| It'll certainly be interesting to see if mining power drops off
| in the coming month.
|
| Long term I'd love to follow something that simply warns when
| there's enough rentable or assumed dark mining power that 51%
| attacks on bitcoin mainchain is a realistic threat.
| 535188B17C93743 wrote:
| The crusade will continue on. Many folks whom have bought into
| BTC at this point know very little about its technology. Not sure
| if that's a good or a bad thing...
| rabbitonrails wrote:
| "who have bought into BTC"
| k00b wrote:
| It's a good thing only if it indicates the UX is getting
| better.
| leorio wrote:
| for all the sceptics here, a good intro to bitcoin and money[1]
|
| https://medium.com/@vijayboyapati/the-bullish-case-for-bitco...
| kiliantics wrote:
| Except that it is now pretty well established that money was
| not preceded by barter, this was just a poorly conceived
| hypothesis of Adam Smith's which has no evidence to support it
| but which happened to catch on with economists
| andrewla wrote:
| If you're wondering why your friends who are into cryptocurrency
| are in a tizzy, it's related to a model called "Stock-To-Flow"
| that attempts to post-facto explain the price of Bitcoin (and
| other liquid assets, like gold) in terms of the rate of
| production.
|
| Proposed by PlanB [1] it is a source of constant
| derision/hope/skepticism/dismissal by the Bitcoin community, and
| the halving of the reward gives it its first non-backtested novel
| prediction.
|
| Roughly it predicts [2] that the price will settle into a band
| around 30,000 USD sometime next year.
|
| [1] https://twitter.com/100trillionUSD
|
| [2] https://cointelegraph.com/news/bitcoin-halving-will-be-
| make-...
| artursapek wrote:
| Shameless plug: you can plot the price of BTC along with the
| "Stock-to-Flow" model in real time on Cryptowatch!
|
| https://share.cryptowat.ch/charts/bqsr58eein8u9uevh370-krake...
|
| https://twitter.com/cryptowat_ch/status/1253335480256483330
| simias wrote:
| Not only is the width of that purple region absolutely
| ridiculous, it doesn't even manage to match the actual data.
| I'm not exactly convinced.
| artursapek wrote:
| You can configure it by # of std deviations, or remove it
| entirely. Thanks for meeting the stereotype of "asshole HN
| commentator" I appreciate your feedback
| petercooper wrote:
| If there were any decent probability of Bitcoin being 3.5x
| higher in a year's time, why wouldn't it already be getting
| priced in?
| throwphoton wrote:
| I wonder how long people with large, leveraged positions are
| able to wait for that increase before they get nervous.
| hanniabu wrote:
| You could have said that in every bull run. You could also
| say that about the S&P, if it's going to be worth more later
| why isn't it instantly that price now? And it's because it
| simply isn't worth that now plus different investors have
| different investment periods.
| odonnellryan wrote:
| BTC is different because it isn't backed by something like
| ownership in a company.
|
| Also, there are different risks than equities. Equities
| have the risk of the company failing or being significantly
| impacted by many different things happening, while there
| are existential risks with BTC I feel these are often
| ignored or accepted as not applicable to most BTC
| investors.
| hlmencken wrote:
| You can't invest in the s&p like that.
|
| > Between January 1, 1963 and December 31, 2014, 1,186
| index components were replaced by other components.
|
| You can know an index of 500 large companies will go up but
| not know what companies will be on that index in the
| future.
| vasilipupkin wrote:
| because there is uncertainty. We explain it here
| https://www.covemarkets.com/blog/investing-in-bitcoin-
| pros-a...
| aeternum wrote:
| Theoretically, but the price increase has always lagged the
| halving, probably because enough people believe it won't
| continue.
|
| This is a pretty good visualization:
| https://i.redd.it/qfekfq88qwp31.png
|
| Keep in mind that this is logarithmic and error bars are
| generally .1 to 10x the actual price.
| zhoujianfu wrote:
| You could argue it is priced in. Maybe there's a 30% chance
| of it being 3.5x higher?
| Traster wrote:
| Can someone explain why their model is drawn on a logarithmic
| axis?
| liquidify wrote:
| If you didn't draw it in a log scale, you wouldn't see the
| patterns when they occurred in the lower levels since the
| size of the later movements would dominate the graph.
|
| Basically it is a way to show that there is similar movements
| in the value even when the ranges they move in are completely
| in different scales.
| Traster wrote:
| But doesn't this effectively just massively under-represent
| the actual deviation between the price and estimate and the
| error bounds. If you convert back in to real numbers this
| estimate is like saying APPL will be between $100 and
| $1000. I'd be interested to know if there are any other
| traded products that we view on a logarithmic scale.
| jhrmnn wrote:
| I assume because in its short history, the bitcoin price has
| spanned many orders of magnitude
| jMyles wrote:
| > If you're wondering why your friends who are into
| cryptocurrency are in a tizzy
|
| I'm not wondering that, because none of my friends are in a
| tizzy. Are your friends in a tizzy? Am I just outside the
| social connections to the tizzy club?
| Alex3917 wrote:
| 1) Lots of people are coming to kill me, but it's ok because I
| have a large private security force to keep me safe.
|
| 2) I'm forced to cut my security budget in half.
|
| 3) ??????
|
| 4) I'm now twice as secure.
| simias wrote:
| Given the ultra-speculative and very volatile nature of bitcoin
| so far, aren't these models effectively numerology? I really
| fail to see how you can reasonably tie bitcoin's rate of
| production with its price.
|
| After all the last halving was in July 9 2016. Since then the
| production has been reasonably constant while the price has
| been a complete rollercoaster.
|
| With logarithmic scales and big enough error bars you can fit
| anything into anything.
|
| >If you're wondering why your friends who are into
| cryptocurrency are in a tizzy
|
| Being into cryptocurrency is reason enough to be honest.
| DC-3 wrote:
| > With four parameters I can fit an elephant, and with five I
| can make him wiggle his trunk
|
| - John von Neumann
| pizza wrote:
| With 26.2 million, I can make the Mona Lisa wink (stylegan)
| :)
| qubex wrote:
| With 52.4 million, I can make her dance a jig.
| javert wrote:
| The bitcoin stock-to-flow model has only three parameters:
| stock, flow, and price.
|
| I'm not here to argue that the model is good or bad, but I
| will say that it's surprising, and interesting.
| wmf wrote:
| The stock-to-flow model posits a causal reason for the price:
| a roughly constant influx of money buying a declining rate of
| BTC production. This seems a lot stronger than technical
| analysis based on "fear and greed" psychology.
| cortesoft wrote:
| I think the idea is that production has a real world cost
| (hardware, power, and space), and those costs determine the
| price (eventually)
| simias wrote:
| Isn't that supposed to be an equilibrium? As in, if the
| price of bitcoin increases (because the economy expands,
| assuming that it's the main currency) then miners make more
| money, so more miners enter the competition which means
| fewer rewards for individual miners and we're back to
| equilibrium?
|
| Given this feedback loop, how do you establish what's the
| proper equilibrium? What's the total amount of hardware
| bitcoin is supposed to stabilize on? As a thought
| experiment, if BTC stabilizes at $30k, that means that the
| total value of all bitcoins will be about half a trillion
| dollars. How can that work if Bitcoin becomes the new
| dollar? Clearly the entire world ecomony is more than that.
|
| Normally I'd assume that I'm missing something and the
| people who came up with that model know more than I do, but
| then again we're talking about cryptocurrencies so...
| AgentME wrote:
| >As a thought experiment, if BTC stabilizes at $30k, that
| means that the total value of all bitcoins will be about
| half a trillion dollars. How can that work if Bitcoin
| becomes the new dollar? Clearly the entire world ecomony
| is more than that.
|
| If people overall wanted to purchase enough Bitcoin to
| have more than half a trillion dollars in Bitcoin, then
| demand would outpace the supply and the price of Bitcoin
| would go up, making it possible to have whatever amount
| of value in Bitcoin. It's nonsense to presuppose the
| price of Bitcoin staying still while demand outpaces the
| supply. No one sets the price of Bitcoin but supply and
| demand.
| petters wrote:
| Yes, I think you are right.
|
| If the price were somehow fixed at $1000, the difficulty
| would eventually be adjusted so that miners would barely
| break even.
|
| Same if the price were somehow fixed at $100,000.
| ashtonkem wrote:
| Nonsense.
|
| First of all, you regularly consume items where the price
| is determined by demand, not production cost. Cars,
| housing, and premium products regularly sell for multiples
| of what they cost to produce.
|
| Secondly, just because something's expensive to produce
| doesn't mean that it's valuable to anyone else. This is a
| common problem in customized products, but also happens
| when market demand either fails to materialize or
| collapses. Your ultra premium buggy whip might be
| incredibly expensive to produce, but if nobody wants buggy
| whips you can't sell it high enough to make a profit.
| kryogen1c wrote:
| > Cars, housing, and premium products regularly sell for
| multiples of what they cost to produce.
|
| many multiples! this is incorrect. the luxury versions of
| those products you listed certainly have higher margins,
| but id be surpised if you could find anything with 100%
| proft margin, much less 3x and beyond.
| jariel wrote:
| No, it's not nonsense and you just kind of just proved
| the comment to which you are responding to.
|
| Price is a function of supply and demand and because most
| markets are fairly competitive, the market-clearing price
| can be predicted roughly from the cost of production.
|
| 'Cars' do _not_ sell at multiples they cost to produce,
| once you factor in all of the overhead of sales and
| distribution, margins are fairly thin. Those are 'real
| costs'.
|
| Almost every single good ever produced is commoditized on
| some level, and therefore market prices are predictable
| from the cost of production.
|
| BTC is no exception: if it costs $1 to make $2 in BTC,
| you can be sure a lot of people will be 'making' BTC
| until the cost of making BTC and it's market value start
| to merge.
|
| The remaining demand for BTC ... given the fact it has no
| use, it's not a currency or a generally accepted store of
| value ... is speculative in the purest sense. It's
| whatever a bunch of dudes holding it want to buy and sell
| them as. Like baseball cards.
| AgentME wrote:
| >BTC is no exception: if it costs $1 to make $2 in BTC,
| you can be sure a lot of people will be 'making' BTC
| until the cost of making BTC and it's market value start
| to merge.
|
| Bitcoin is weird though because no matter how many miners
| there are, it's still minted at the same rate globally.
| If it cost a miner $1 to make $2 in Bitcoin, what would
| _not_ happen is new miners joining and flooding the
| market with more Bitcoins until the price of Bitcoin
| falls. Instead, new miners would keep joining and the
| miners would be cutting into each other 's profits until
| it cost them all approximately $2 to make $2 in Bitcoin.
| AznHisoka wrote:
| That's like saying the harder you work on a software
| product, the more you should charge for that product...
| paulgb wrote:
| This is essentially the (discredited) labor theory of
| value.
|
| https://en.wikipedia.org/wiki/Labor_theory_of_value
| ashtonkem wrote:
| Which ironically is one of the underpinnings of Marxism.
|
| Edit: it's literally the second sentence in the Wikipedia
| article:
|
| > LTV is usually associated with Marxian economics
|
| The irony is in a Bitcoin investor and Marxists sharing
| some economic common ground for their beliefs, since
| otherwise those groups rarely have much in common.
| dnautics wrote:
| Adam Smith believed it, too.
| claudiawerner wrote:
| There are some pretty well-mounted contemporary (i.e.
| last 20 years) defences of Marx's formulation of "the
| labour theory of value" (the terminology is up for
| debate, since Marx never used that phrase himself, and
| his theory is distinct from Smith's and Ricardo's) and
| the theory's normative conclusions. These defences come
| from philosophers and heterodox economists alike.
|
| There's a Reddit comment here[0] with links to them, but
| it's up to you to decide if they're worthwhile or not. I
| have some doubts, but I would not go as far as to throw
| the word "discredited" in so casually. The comment also
| includes links to research against the "LTV".
|
| [0] https://www.reddit.com/r/badeconomics/comments/fht0ti
| /marxs_...
| bcoates wrote:
| The reddit post still describes an intrinsic value
| theory. _All_ intrinsic value theories are discredited,
| not just this or that formulation of the LTV.
|
| It's fairly trivial to reason from any given intrinsic
| value theory to absurdities, this is basically the
| foundation of marginalism and the last 150-odd years of
| economics.
| bkwagon wrote:
| That's not a good illustration of LTV, which is not
| discredited at all. For traditional software, the vast
| majority of the labor involved takes place at the initial
| creation. The rest is (much less costly, in LTV terms)
| distribution and licensing.
| ForHackernews wrote:
| Exactly, just like how workers get paid a salary in
| accordance with the real-world costs they bear in order to
| produce their output...er wait, this isn't how prices work
| is it?
| kortilla wrote:
| That effect goes the other direction though. The price has
| to go up for people to bother to produce. If the
| speculation dries up a bit, the price won't increase and
| this halve reward will wipeout miners with low margins and
| the remaining will still keep producing the same amount
| with a higher cost.
|
| Remember, production is built right into the protocol. 10
| miners could keep the network going at the same pace.
| gridlockd wrote:
| > Remember, production is built right into the protocol.
| 10 miners could keep the network going at the same pace.
|
| A network with only 10 miners could easily be attacked
| with minimal effort. The only thing stopping the attacker
| would be the fact that it's a waste of time, because a
| cryptocurrency with only 10 miners is worthless.
|
| Wiping out too many miners at once is dangerous business.
| vertex-four wrote:
| That's literally backwards to how this works though. Just
| because you fire up a bunch of miners doesn't make
| Bitcoin's value jump - it's the opposite, Bitcoin's value
| jumping makes it cost-effective to run additional miners.
| nannal wrote:
| Firing up additional mining would split the rewards
| between more people causing fewer rewards per
| participant.
|
| Miners engaged in mining before I arrived would have the
| same costs they had before, but now with fewer BTC to
| cover them, this would force them to sell at a higher
| price or operate at a loss until they drown the
| competition.
|
| There are two ways to look at it.
| legolas2412 wrote:
| Forced to sell at a higher price?
|
| My dreams of being a millionaire are forcing me to sell
| this orange for a million dollars. Ergo, oranges will now
| retail for a million dollars.
| Nursie wrote:
| "Force them to sell at a higher price" ... so they decide
| the market?
|
| Nope.
|
| Miners have costs to cover, mining unprofitably and
| holding makes no sense whatsoever (you're literally
| better off turning off your rig, buying on the market and
| holding at that point)
| cortesoft wrote:
| I wasn't trying to make a causal argument... just saying
| that the price to mine and the price of the coins will
| meet an equilibrium.
| amiga_500 wrote:
| So they are predicting a 70% drop in the value of usd in
| energy terms. Hmmmmm.
| alvarelle wrote:
| I believe you got it backwards. The price of bitcoin
| determines how much the miners are going to spend to
| produce it.
|
| (Or we are both wrong)
| mywittyname wrote:
| Or your both correct. There are two sides to the coin.
| Miners are more likely to enter or expand in a profitable
| market. Profitability is measured by income - costs.
| Thus, costs -- in this case, electricity, real estate,
| equipment price -- set a long-term price floor for
| bitcoin.
|
| They can be mined at a loss temporarily, in order to
| drive out competition, but at some point, a miner
| operating at a loss will go bankrupt. This is no
| different from the oil industry, where capital outlays so
| high that most players continue to produce at a loss,
| temporarily. But long-term, the price must at least match
| costs of production.
| AgentME wrote:
| The cost of mining doesn't set a price floor. If the
| price of Bitcoin falls so that the revenue of mining
| falls below the costs of mining, then miners will drop
| out until the cost of mining falls enough too.
|
| Bitcoin is minted at a predefined global rate; the amount
| minted doesn't depend on the number of miners. Miners
| compete with each other for a share of the predefined
| minting action, so some dropping out does not decrease
| the minting rate of Bitcoin, but instead makes it more
| profitable for the remaining miners.
| unhashable wrote:
| "All models are wrong, but some are useful."
|
| - George Box
| simias wrote:
| Predicting _past_ performance with error bars measured in
| parsecs doesn 't sound super useful to me.
| paulgb wrote:
| "And some are not"
|
| -- Anyone who has watched people apply technical analysis
| to Bitcoin charts as a source of amusement over the last
| decade
| hanniabu wrote:
| I would say that depends. The macro trends have been
| pretty obvious.
| santiagobasulto wrote:
| Thank you. I have a very close friend that has been doing
| this for some time, and it's really painful to see him
| lose money to those "forecasts" that resemble more
| astrology than science. I see from your profile you're a
| Quant. Is there any guidelines I could give him? Any
| recommendations to go to the more "scientific" side of
| finance, and stop looking at charts and draw arbitrary
| lines to try to come up with patterns.
| lottin wrote:
| Basic economic theory and econometrics. Finance theory is
| just a thin layer on top of that.
| paulgb wrote:
| Sure, I can try. My thoughts on this actually come more
| from my experience in prediction market betting than my
| work, which is hard to apply at an individual level.
|
| I think just properly accounting for wins and losses can
| be good at instilling a sense of humility; I'd recommend
| he calculate his track record if he hasn't already. I
| enjoyed the book Thinking in Bets by Annie Duke, which is
| about the psychology of developing some habits around
| making bets and the cognitive biases we have. A Random
| Walk Down Wall St. is also a classic that is good at
| instilling a sense of humility in you as an individual
| investor.
| hutzlibu wrote:
| What is a "quant", when referring to a person?
| pizza wrote:
| Quantitative analyst https://en.wikipedia.org/wiki/Quanti
| tative_analysis_(finance...
| pjc50 wrote:
| Another key factor which these models often ignore is the rate
| of "Tether" printing, which is often used to buy bitcoin and is
| not subject to limits.
|
| My own prediction is to observe that the price has been in a
| wide band around $10k for the past year, so will continue to
| hover around that, with gradual upslopes and sudden dropoffs of
| 5-30% for no apparent reason that cannot easily be post-hoc
| linked to events.
| hanniabu wrote:
| Tether didn't always exist
| ac29 wrote:
| > Roughly it predicts [2] that the price will settle into a
| band around 30,000 USD sometime next year.
|
| No, it predicts it will be at $30k at the end of _this_ year,
| and $100k this time next year [0]. I 'm pretty comfortable
| saying that no, it wont. If I though there was a reasonable,
| legitimate way to trade against that outcome occuring, I
| absolutely would. For reference, in the past year, BTC has
| increased in price by ~$1450 or 20% - getting to $100k would be
| over 1000% increase.
|
| [0] https://digitalik.net/btc/
| radium3d wrote:
| According to my theory based on BTC history the next peak
| will be $225038 or a 1020% increase over the previous peak.
| That's kind of conservative. My last estimate for the next
| peak was only $8903 but it hit $20089 or 1681% increase over
| the previous peak. I don't own any BTC but I just did this
| little sheet for fun lol :) also I don't try to predict when
| this happens, just a fun estimate on the next peak.
|
| https://docs.google.com/spreadsheets/d/1qgqvFR6HeVNkw2fxLgdr.
| ..
| odonnellryan wrote:
| Have you tried to do this same analysis on other
| commodities, securities, etc?
| freepor wrote:
| Nobody knows what a barrel of oil will cost next year so any
| claims about the future price of Bitcoin come from someone who
| is trying to scam you.
| 9nGQluzmnq3M wrote:
| Actually, we know exactly what a barrel of oil for delivery
| in May 2021 will cost ($33 at time of writing), and you can
| go buy some right now:
|
| https://www.wsj.com/market-data/quotes/futures/CLK21
| somebodythere wrote:
| The cryptocurrency markets are a lot less efficient than the
| traditional financial markets.
| ColanR wrote:
| > the halving of the reward gives it its first non-backtested
| novel prediction
|
| You have my curiosity. What is the prediction that Stock-To-
| Flow made about the effect of the halving?
| liquidify wrote:
| I don't agree that this is the reason that people are in a
| "tizzy". To me this instance is an instance where a shock
| enters the system.
|
| Think of it like a differential equation where a steady state
| is changed... like a spring that has been held in a certain
| position is released. There will be a shock as the system seeks
| to find a new equilibrium.
|
| The fact that the system has been shocked means that there is
| some predictable craziness that will happen soon. It is
| basically guaranteed fun no matter how it turns out.
|
| I've been following bitcoin a long time, and was excited for
| the halving. But I'd never heard of the model you described and
| could care less about it.
| mraudiobook_com wrote:
| An intelligent comment about Bitcoin on HN? Prepare to be
| down voted to hell.
| mianos wrote:
| It would be more apt to say the spring is in a high viscosity
| fluid. It takes some time for the fluid to move away because
| there is some friction in the system. It's free to make small
| movements quite quickly but the longer ones are damped. But
| there is a spring in there with one end connected to
| something. In the case of BTC it's probably connected to a
| much larger mass in the fluid that can move itself, not held
| down like some fiats.
| amiga_500 wrote:
| 30k usd? Let me tell my wife!
|
| https://m.youtube.com/watch?v=64R918K-3L8
|
| With the extreme uncertainty globally, this model cannot be
| reliable.
| StLCylone wrote:
| Where would the climate crisis be if we diverted all the energy
| spent on Bitcoin mining into carbon sequestration?
| k00b wrote:
| Coinbase transaction message in last mined block with 12.5 BTC
| subsidy: "NYTimes 09/Apr/2020 With $2.3T Injection, Fed's Plan
| Far Exceeds 2008 Rescue"
|
| https://blockchair.com/bitcoin/block/629999
| 2bitencryption wrote:
| I hope they picked the title of the article in the physical NYT
| paper release, and not the nytimes website, since the website
| is known to change the title.
| arcticbull wrote:
| Ooh! Ask them about Tether! And how all the worlds crypto
| prices are in USDT, which is at most 70% backed (30% seized by
| the feds in a money laundering sting) and has never been
| audited.
| lend000 wrote:
| If you are so confident, why not sit on a Tether short?
|
| The reality is that the market expects solvency for the
| foreseeable future, and tether solves a market problem
| (liquidity in environments that do not impose the KYC laws
| required by the US government to trade USD), thereby allowing
| Bitcoin users to achieve a level of anonymity while still
| having liquidity. It also, of course, allows a wider variety
| and leverage range of financial instruments.
| arcticbull wrote:
| > If you are so confident, why not sit on a Tether short?
|
| Because betting either way in a manipulated market is a
| sucker's game. Bitfinex has their finger on the scales. Why
| on earth would I bet in their casino?
|
| Does anyone other than Bitfinex even allow you to short
| USDT? Remember those two are one and the same, and Bitfinex
| doesn't even have _banking_. What are they going to pay my
| USDT short in? USDT?
| seibelj wrote:
| https://www.theblockcrypto.com/post/48857/former-head-of-
| cir...
|
| > Matuszewski told On the Brink's Nic Carter that the
| idea of tethers driving the price of bitcoin
| significantly higher is "not true whatsoever."
|
| > "I say this as someone who created and redeemed
| billions of tether over the course of my life and
| specifically created it in 2017," he said.
|
| > In short, Matuszewski affirmed that there were
| incentivizing events for the generation of Tethers.
| Bitfinex didn't print Tether out of nowhere either, since
| Matuszewski said he himself was one of the drivers.
|
| > "I can tell you that billions of dollars were sent in
| to make it like that," he said. "I can 100%, without
| question, verifiably guarantee it happened. I did it, I
| was there...That money wasn't just being hypothecated. It
| wasn't just coming out of thin air, that was happening."
|
| I worked for Circle, I worked with Dan, and I can
| guarantee you that Dan (former head of Circle Trade, the
| second largest crypto OTC desk) knows his stuff, and
| Tether is _nowhere near_ as sketchy as your posts and
| conspiracies would have you believe.
| arcticbull wrote:
| > In short, Matuszewski affirmed that there were
| incentivizing events for the generation of Tethers.
| Bitfinex didn't print Tether out of nowhere either, since
| Matuszewski said he himself was one of the drivers.
|
| Great! Then an audit should be right around the corner,
| yeah? Or did we forget when their last auditor _quit_
| [1].
|
| > "I say this as someone who created and redeemed
| billions of tether over the course of my life and
| specifically created it in 2017," he said.
|
| Tether's terms of service: "The right to have Tether
| Tokens redeemed or issued is a contractual right personal
| to you. Tether reserves the right to delay the redemption
| or withdrawal of Tether Tokens if such delay is
| necessitated by the illiquidity or unavailability or loss
| of any Reserves held by Tether to back the Tether Tokens,
| and Tether reserves the right to redeem Tether Tokens by
| in-kind redemptions of securities and other assets held
| in the Reserves." [2]
|
| Translation: Redemptions _not guaranteed_.
|
| > I worked for Circle, I worked with Dan, and I can
| guarantee you that Dan (former head of Circle Trade, the
| second largest crypto OTC desk) knows his stuff, and
| Tether is nowhere near as sketchy as your posts and
| conspiracies would have you believe.
|
| I'm sure the NYAG disagrees. [3]
|
| Likely in no small part because one large market
| participant doesn't validate a fraud. They would be
| hugely incentivized to provide Matuszewski service so
| that he could go on record and say exactly this kind of
| thing. I'm sure the same quotes could be attributed to
| big players in the Madoff case.
|
| So, in short: _[audit needed]_
|
| [1] https://markets.businessinsider.com/currencies/news/c
| ryptocu...
|
| [2] https://tether.to/legal/
|
| [3] https://cointelegraph.com/news/new-york-ag-finds-it-
| perverse...
| seibelj wrote:
| There is absolutely nothing I could say to change your
| mind, any reader can see the arguments made, and it's
| left for them to decide.
| arcticbull wrote:
| You show me an audit and I'll tell the world I was wrong
| from the rooftops.
|
| Is an _audit_ for the thing that represents over 80% of
| the volume of all cryptocurrency exchanges _that much to
| ask_?
|
| Should we just have faith that the lord Satoshi is come?
| lend000 wrote:
| I'm certain that's the right decision for you. But for
| those who spend time understanding markets instead of
| mythologizing them (and assigning any unpredicted
| movement to a boogieman), there is absolutely alpha to be
| had, and the market is not so easy to manipulate as many
| (almost exclusively non-quants) believe.
|
| It's popular to shit on cryptocurrencies these days, and
| they certainly have their shortcomings, but they are
| still fascinating systems and the markets are even more
| interesting. Instead of intellectual discussion, people
| seem to flood the comments with hate and jealousy,
| presumably because some people made more money than them
| due to presumed luck.
| wpietri wrote:
| The popularity of shitting on cryptocurrencies is
| directly in proportion to the level of hype that never
| lived up to anything. They were supposed to revolutionize
| the world's economy. But so far they only have proven
| utility for speculation and light financial crime.
|
| Is it possible that somebody will make money speculating
| on cryptocurrencies? Sure. Some people make money from
| MLM schemes too. But ultimately these are negative-sum
| activities: more money goes in than comes out. And a lot
| of the money going in is from suckers being taken for a
| ride. I think there's nothing wrong with people being
| negative about that.
| lend000 wrote:
| Based on the tone of the parent, I think we can probably
| agree his interest is more about deriding those who are
| involved in cryptocurrencies (whether they won or lost in
| the market) than offering a warning to protect newcomers.
|
| Like most, you have trivialized the use cases in places
| like Venezuela and Zimbabwe where the state backed
| financial system has failed. With the current state of
| technology, Bitcoin has no ability to replace the global
| payment network. Claiming that means it's a failure that
| hasn't lived up to anything is hyperbole. The system's
| very existence and self maintenance after over a decade
| is impressive enough to me. I also believe the financial
| utility of a new asset class with new properties is
| interesting and useful on its own, although I doubt the
| layman would agree.
| arcticbull wrote:
| > ... Venezuela and Zimbabwe.
|
| Those are utterly irrelevant until you solve the initial
| distribution problem. Ready for it?
|
| - Those people don't have money.
|
| - The only way to purchase a meaningful quantity of BTC
| is through purchase on an exchange. After all, it's twice
| as hard to mine today as it was yesterday, and in
| Venezuela you'll just get your mining rig socialized
| (this has happened a few times).
|
| - If you exchange within the country, then you're just
| moving the poops around. It's zero sum. Steve has a bunch
| of Bolivars. He exchanges with Alice for BTC. Now Alice
| has a bunch of Bolivars, and Steve has BTC. The net worth
| of the system was preserved perfectly. BTC did nothing
| for the union of Alice and Bob -- except they lost a
| ~$0.50 transaction fee, which is a few days wages.
|
| - If you exchange outside the country, who on earth
| outside the country wants your Bolivars?! If you can
| exchange outside you may as well buy Gold or Dollars.
| Those haven't dropped 50% in the last 3 years. Even if
| you did buy BTC, it's still a zero net sum situation --
| except they lost a ~$0.50 transaction fee, which is a few
| days wages.
|
| Bitcoin is meaningless for third-world countries in
| aggregate until the initial distribution problem is
| solved.
|
| The problem in Venezuela isn't a piss-poor currency,
| that's a symptom of a piss-poor government. No amount of
| magic beans will change that, until the people solve the
| problem.
| AnthonyMouse wrote:
| > If you exchange outside the country, who on earth
| outside the country wants your Bolivars?!
|
| Nobody. So you don't buy BTC with Bolivars, you sell art
| commissions or do some work on Mechanical Turk or grind
| for online game currency with a real market value, and
| arrange to receive payment in BTC. Then you buy stuff
| with BTC.
|
| Meanwhile if there isn't that much BTC in the country,
| that doesn't matter -- currencies can have a different
| value in different places when arbitrage is restricted.
| So maybe BTC is worth more there. Or maybe arbitrage
| isn't really that restricted in practice and if it
| started to be more expensive there somebody would make a
| profit by supplying BTC in exchange for exporting
| boatloads of oil or coffee beans or whatever people in
| those countries produce.
| lend000 wrote:
| You seem to have completely missed the point that there
| have been severe currency exchange controls in Venezuela
| for over a decade. These Venezuelans aren't trading
| Bolivars outside the country; they are exporting BTC
| mined with a mismanaged electrical grid to get food,
| toiletries, etc. imported into the country.
|
| Yes, you can buy things with BTC.
|
| https://reason.com/2016/11/28/the-secret-dangerous-world-
| of/
|
| > that's a symptom of a piss-poor government. No amount
| of magic beans will change that,
|
| Did it solve their government problem? No. But it
| resulted in a little more food in the country then there
| would otherwise be by allowing citizens to subvert their
| government's financial controls. BTC provides a base
| level quality of money, that basically acts as an
| insurance system against the worst governments. Does it
| have a huge use case in a country with a healthy and
| functional financial system? No. But if things go to shit
| in a country, people can still use Bitcoin and safely
| transfer value online instead of reverting to trading
| gold coins in person.
|
| I know you want all things BTC to be bad. But try to keep
| it intellectual, not emotional. What about the technology
| -- do you think it's fascinating that a relatively simple
| and elegant protocol of incentives and cryptography can
| result in a self sustaining financial system still
| running a decade after its release?
| arcticbull wrote:
| Of course it can address the needs of a few by stealing
| power and avoid the government nationalizing a few rigs.
| That's utterly useless for the general population.
|
| > But if things go to shit in a country, people can still
| use Bitcoin and safely transfer value online instead of
| reverting to trading gold coins in person.
|
| For a small handful of people. That doesn't address the
| problem on a broad scale. The bar isn't "can Bitcoin
| address the needs of a small handful of people in
| Venezuela." Of course it can.
|
| > What about the technology -- do you think it's
| fascinating that a relatively simple and elegant protocol
| of incentives and cryptography can result in a self
| sustaining financial system still running a decade after
| its release?
|
| I think it's fascinating a single transaction expends
| 700kWh (enough to drive a Model S from SF to New York)
| and produces 87 grams of e-waste -- and yet somehow costs
| less than $0.50, which is due to the socialization of
| costs in the form of block rewards, aka inflation. Each
| BTC transaction actually costs about $70.
|
| I think it's fascinating a system brought in to free us
| from the tyranny of a single entity's ability to freely
| print currency has had it's pricing entirely subsumed by
| an entity with the ability to freely print a currency
| who's symbol is just one character off.
|
| Just because something's simple doesn't make it good.
| csomar wrote:
| Kraken does and they are US regulated. Good luck with
| your short, you should make %100 of your money risk-free
| when Tether implodes.
| ac29 wrote:
| Given their fees (0.06%/day, or ~22%/year), you'd have to
| be right on the collapse pretty quickly to turn a profit.
|
| https://www.kraken.com/features/fee-schedule
| arcticbull wrote:
| Tether itself is manipulated lol, even if I short it in
| Kraken I'm still playing Bitfinex's game. Once 30% of
| their reserves were seized they remained 1:1 -- there's
| no way to win whether I'm right or wrong.
| [deleted]
| chillacy wrote:
| There is a short play here: if there's ever a bank run on
| Tether, it'll crash to 0. The bet would be to hold onto
| this short and wait for this event to happen, but given
| how banks survive with fractional reserve banking, it's
| entirely possible that a bank run will never happen.
| arcticbull wrote:
| True, though I'd also have to have faith that the
| exchange remains solvent and that an upwards run in
| Tether (and it does run up ~10% from time to time)
| doesn't blow through my collateral -- on top of my other
| concerns. I think there's easier ways to make money,
| after all Madoff's scam took 40 years to unravel. I'm not
| willing to wait that long.
| MandieD wrote:
| As our old friend John Maynard Keynes allegedly said, and I
| repeat to myself every time I'm tempted to short something
| I think is wildly overpriced, "the market can remain
| irrational longer than you can remain solvent."
| mraudiobook_com wrote:
| Why do HNers turn into such idiots around Bitcoin?
| seibelj wrote:
| You grind this axe in literally every crypto thread, it's
| getting very stale. Yes, you hate Bitcoin, we get it!
| liquidify wrote:
| He is right. Tether is completely messed up.
| seibelj wrote:
| No one puts a gun to anyone's head to use it. There are
| many stablecoins now, with various properties. USDC
| trades at the same value as USDT
| https://www.circle.com/en/usdc
|
| Traders value Bitcoin the same in USDT or USDC, and USDT
| / USDC trades at parity. That implies the market trusts
| USDT. It doesn't matter what people on HN say, as long as
| the market agrees.
| occamsrazorwit wrote:
| > It doesn't matter what people on HN say, as long as the
| market agrees.
|
| The market can never overvalue or undervalue? Hmm...
| wpietri wrote:
| > It doesn't matter what people on HN say, as long as the
| market agrees.
|
| "It doesn't matter what those crazy geologists say, as
| long volcano hasn't exploded yet."
| arcticbull wrote:
| Frankly it's really strange to hear on the one hand:
|
| 1. ...that "the feds are debasing our currency through
| their relentless printing"
|
| It is producing a measured, consistent, relatively small
| 2% rate of inflation over decades and decades. They are
| of course acting on behalf of an elected body, and
| ultimately accountable to that body. They're also
| audited.
|
| 2. ...that Tether's relentless, un-audited, 70%-at-most
| backed printing is fine because the "market trusts it"
| and "nobody's forcing you to use it."
|
| The market trusts it because number go up, and it's in
| the interest of exactly zero market participants to show
| the world the emperor has no clothes.
|
| It's also not fair to say that "nobody's forced to use
| it" when everyone is forced to use it. In 2018, 80% of
| all crypto exchange transactions were conducted in
| Tether. That makes USD transactions by far the minority.
| Since arbitrage bots keep the prices in sync, and the
| majority is USDT, even the USD exchanges follow the USDT
| prices so long as there exists sufficient liquidity to
| balance the books. [1]
|
| [1] https://www.wsj.com/articles/the-mystery-behind-
| tether-the-c...
| csomar wrote:
| I'm not sure what is that you are missing? Many exchanges
| now offer a set of Stable coins. If you had concerns with
| USDT then you should switch to USDC which so far
| functions the same as USDT. I did. Many people probably
| also did. USDT still holds its peg and did hold its peg
| through some bad price swings. So either it's fully
| backed or they are doing some magic there.
|
| > The market trusts it because number go up, and it's in
| the interest of exactly zero market participants to show
| the world the emperor has no clothes.
|
| Wouldn't work on extreme market fluctuations. Bitcoin
| dropped 50% and USDT still hold the peg. Bitcoin then
| almost tripled in a short period and USDT still hold the
| peg. I'm not sure if they have full reserves or running
| some magic; but whatever they are doing is working very
| well.
| javert wrote:
| > I'm not sure if they have full reserves or running some
| magic
|
| Presumably they buy tether when it's under $1 and sell it
| when it's over $1 to maintain the peg. Not magic.
| arcticbull wrote:
| > I'm not sure if they have full reserves or running some
| magic; but whatever they are doing is working very well.
|
| We _know_ they don 't have full reserves because we
| _know_ 30% of them were seized. [1]
|
| > ...but whatever they are doing is working very well.
|
| Frauds work until they don't.
|
| [1] https://cointelegraph.com/news/head-of-crypto-
| capital-arrest...
| kyuudou wrote:
| >They are of course acting on behalf of an elected body,
| and ultimately accountable to that body.
|
| That body being whom?
|
| >They're also audited.
|
| By whom?
| arcticbull wrote:
| The Fed determines monetary policy. The president of the
| United States appoints the Fed board. Ergo the fed is
| accountable to the people of the United States. [1]
|
| [1] https://www.newyorkfed.org/aboutthefed/fedpoint/fed46
| .html
| arthurcolle wrote:
| Agreed - some find it useful to have this instrument in
| order to move dollars to crypto, so it's really no worse
| than the fiat currencies that we are forced to use, and
| that many are deciding to move away from.
|
| It is a fact that at present, you can't replace your
| entire life with cryptocurrency transactions, but the
| actions of the Federal Reserve over the last few months
| demonstrate how useful it is to have a parallel construct
| that actually represents an asset that isn't immediately
| able to be transmogrified by actions of a shadowy cabal
| (JPow in particular, who with his 50mm nest egg stuck in
| a hole at BlackRock, has a direct incentive to keep
| markets afloat)
|
| Just my $0.02
| chipperyman573 wrote:
| I've never heard of Tether before this, what effects does
| it have on the btc halving?
| DarthGhandi wrote:
| To actually answer your question: Tether has nothing to
| do with the halving. It's just a chance for these people
| to segue into rants about it.
| wpietri wrote:
| HN's own patio11 has an excellent long explainer on
| Tether: https://www.kalzumeus.com/2019/10/28/tether-and-
| bitfinex/
| DarthGhandi wrote:
| Here he is getting worked up about it in 2017 and
| claiming it's on par with Mt. Gox and only has months
| left: https://news.ycombinator.com/item?id=15745532
|
| I find the older comments really illustrate some of the
| cognitive dissonance Tether skeptics hold.
|
| Keep doubling down I guess, might get lucky one day.
| arcticbull wrote:
| - 80+% of crypto exchange transactions aren't denominated
| in USD, but in USDT.
|
| - USDT is a fictional currency invented by Bitfinex to
| make up for the fact they don't actually have access to
| banking because they're _unbelivably shady_.
|
| - They got many other exchanges onboard since it
| effectively allows you to skirt AML and KYC regulations.
|
| - Bitfinex is a shadowy cabal of truly dreadful market
| participants who mess around under the covers with Tether
| and use it to effectively control pricing. They print
| Tether and use it to buy BTC to drive the price up. They
| then sell BTC for Tether if they want to drive the price
| down.
|
| - They promised for 5+ years that they'd get Tether's
| bank account audited but instead auditors up and quit.
|
| - They had 30% of their assets seized in a money
| laundering sting but of course, the exchange rate
| remained 1:1 instead of 1:0.7
|
| - The NYAG is suing them.
|
| The price you see of BTC doesn't really reflect anything
| other than Bitfinex' manipulation. The rate of BTC
| inflation falling from 12.5BTC/block to 6.25/block
| affects miners and their ability to be solvent. Not much
| else.
| AnthonyMouse wrote:
| > They had 30% of their assets seized in a money
| laundering sting but of course, the exchange rate
| remained 1:1 instead of 1:0.7
|
| Is the exchange rate supposed to be related to the amount
| of assets they hold? If you go to exchange one currency
| for the other in either direction and that's the amount
| you can get, that's the exchange rate. If everybody tried
| to cash out all at once then they might not have enough,
| but neither would Bank of America. That doesn't mean the
| exchange rate between physical cash and Bank of America
| deposits isn't 1:1.
|
| Meanwhile they presumably turn a profit, so just because
| they lost some of their assets, how do you even know they
| don't still have enough?
| xtracto wrote:
| > - They had 30% of their assets seized in a money
| laundering sting but of course, the exchange rate
| remained 1:1 instead of 1:0.7
|
| Thsi one I don't understand: A ton of MXN has been seized
| because El Chapo had been using it for shady stuff, but
| yet nobody expects the MXN/USD pair to suffer from that.
|
| Why would it be different? The fact that someone takes
| the token "by force" won't suddenly decrease their value.
| arcticbull wrote:
| If El Chapo seized 30% of the MXN in existence I'd
| suggest the currency would in fact fluctuate lol.
| bostonpete wrote:
| Printing new money is generally understood to devalue
| existing money, why wouldn't the opposite be true? I
| don't understand your El Chapo point or know what sort of
| assets were confiscated. Even if it was all cash, I'm
| guessing it wasn't just incinerated.
| AlexCoventry wrote:
| They mean that 30% of the assets backing tether were
| seized, not that the tether itself was seized.
| TylerE wrote:
| Because Tether claims to hold $1 for every $USDT.
|
| But they obviously don't, they hold, at most, 70 cents.
|
| It'll be a bank run.
| wmf wrote:
| AFAIK MXN never claimed to be backed by USD, but Tether
| claimed that USDT are backed 1:1 by USD in a bank
| account. We now know that there aren't $6B in that
| account but people still choose to trade USDT near par
| with USD; I guess this is analogous to how the value of
| the USD didn't fall when it became no longer gold-backed.
| arcticbull wrote:
| ...which is literally the flagship problem BTC purports
| to attempt to solve.
| AnthonyMouse wrote:
| Which is why USDT isn't Bitcoin. Its purpose is to solve
| a different problem.
| catalogia wrote:
| > _stale_
|
| How is that relevant? If he's right, he's right.
| [deleted]
| 0x8BADF00D wrote:
| Crypto can be priced in anything, including gold. Please
| think a little before posting like this. It ruins the quality
| of discussion.
| [deleted]
| jayd16 wrote:
| He's talking about how tether is backed. If its backed by
| other coins and or even itself through the smoke screen of
| other coins then its not really backed at all.
|
| I think in the context here, "pricing with gold" would mean
| you need to find someone who will actually give you that
| price in gold.
| scottlocklin wrote:
| Nobody tell him about fractional reserve banking.
| arcticbull wrote:
| ... the thing Bitcoin set out to eliminate? Now it has
| the same flaws as the regular financial system, but much
| less efficient. Where do I sign up?
| csomar wrote:
| Though I'm not sure why so many people were hinged about
| Tether (albeit the average solidity of its peg meant it's
| legit); the positive effect of this is that we now have lots
| of different stable USD coins: Coinbase, Gemini, TrueUSD,
| Binance all have stable coins with a total cap of over $1bn.
| Sure it's much less than TetherUSD $6.3bn but it's roughly
| 16%. Much better than the total monopoly of tether two years
| ago.
| SkyMarshal wrote:
| _> the positive effect of this is that we now have lots of
| different stable USD coins: Coinbase, Gemini, TrueUSD,
| Binance all have stable coins with a total cap of over
| $1bn._
|
| "Stablecoins" are not stable. How many times do we have to
| learn this lesson in finance? The probability distribution
| underlying this stuff is not what stability proponents
| think it is. They will be stable until they aren't, and
| then they will blow up. Chasing stability in inherently
| unstable systems is a fool's game.
| product50 wrote:
| Read more about USDC and then come back. USDC is
| literally backed 1-1 with USD in a bank - by definition.
| TylerE wrote:
| Because when the whole house of tulips inevitably comes
| crashing down, the stable coins are gonna be worthless too.
|
| So people will take 99.99999999% losses and not 60-80%.
|
| Real dollars go in.... IOUs out of a bull's behind come
| out.
| chrischen wrote:
| Bitcoin is the preferred payment method of extortionists
| and criminals world-wide. Accepted everywhere cash is. So
| yes, it has had a legitimately illegitimate use case.
| toomim wrote:
| No it's not. That's a common misconception, but the
| studies show that USD is used about 100x more than
| cryptocurrencies for crime. This is because:
|
| 1. Criminals don't want their activities to be tracked on
| a public ledger. Cash is anonymous. Bitcoin is not.
|
| 2. Criminals already have money laundering systems in-
| place, and relationships with corrupt bankers.
|
| 3. Cash is accepted at more places. So it's more useful
| to have.
|
| We're talking trillions of dollars in USD crime here.
| It's not even close.
| csomar wrote:
| Coinbase/Gemini USD are US regulated. So... no.
| TylerE wrote:
| Because regulation worked SO WELL in numerous cases
| anyone could name (Enron, Worldcom, Authur Anderson,
| Lehman Brothers...)
| product50 wrote:
| Yeah - everything is fucked so why do anything? Lets just
| sit here and criticize everything. And that is the life
| we choose to live.
| TylerE wrote:
| That's pointlessly reductionist. Just because we can't do
| perfect means we should look at a steaming pile of
| dogshit like it's filet mignon.
|
| The short term solution to "everything's fucked" is to
| _stop making it even more fucked_.
| arcticbull wrote:
| Picking out a small handful of obvious failures is not a
| useful exercise for or against regulation. Regulation has
| had numerous incredibly life-chantingly beneficial
| effects on our lives. Thanks to the EPA, the rivers no
| longer _literally catch fire_. I 'd trade one Enron for
| lakes of water instead of lakes of fire any day.
|
| Regulation can be good, regulation can be bad, how you do
| it matters far more.
| ac29 wrote:
| Given this all-caps disclaimer, I wouldn't exactly be
| reassured that USDC would be worth anything in the event
| Coinbase went out of business:
|
| "USDC IS NOT LEGAL TENDER. USDC IS A DIGITAL CURRENCY AND
| COINBASE HAS NO RIGHT TO USE ANY USDC YOU HOLD ON
| COINBASE. COINBASE IS NOT A DEPOSITORY INSTITUTION, AND
| YOUR USDC WALLET IS NOT A DEPOSIT ACCOUNT. YOUR USDC
| WALLET IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
| CORPORATION (FDIC) OR THE SECURITIES INVESTOR PROTECTION
| CORPORATION (SIPC)."
|
| (https://help.coinbase.com/en/coinbase/getting-
| started/genera...)
| gruez wrote:
| >Given this all-caps disclaimer, I wouldn't exactly be
| reassured that USDC would be worth anything in the event
| Coinbase went out of business:
|
| But every line in the disclaimer are probably applicable
| to bond/USD ETFs as well, but people aren't exactly
| fleeing from those.
| ac29 wrote:
| Bond holders have a certain legal right to claims on
| assets of a company that becomes insolvent - I'm not sure
| what legal rights USDC holders would have.
|
| But either way, I think most people would not tend to
| view something like USDC as a bond (in which the bond
| holder is a creditor to the bond-issuing organization,
| with the associated risk-adjusted return on capital), but
| more like cash.
| shawabawa3 wrote:
| If you read the FAQ, Coinbase doesn't even issue USDC,
| Circle does, so Coinbase going out of business won't
| affect the balances in Circle's bank account or the
| redeem-ability of USDC. They also actually publish
| regular audits unlike Tether
|
| https://help.coinbase.com/en/coinbase/getting-
| started/genera...
| DarthGhandi wrote:
| Tether to me comes across as one of these things HN and the
| skeptics got so painfully wrong for years.
|
| It would be amusing to go through all the posts from 2017 on
| the subject.
| arcticbull wrote:
| I think you'd find them pretty consistent: "where is the
| audit you keep promising?"
| shobith wrote:
| But what about Hillary's emails!
| arcticbull wrote:
| Hillary didn't promise to hire an auditor over, and over
| for years, then hire an auditor, and then fire the
| auditor when things started going pear-shaped during the
| audit. Or, you know, have 30% of her email seized in an
| AML sting. My point is, the analogy falls over right
| quick.
|
| I'm also not asking for proof of a negative (that Hillary
| didn't destroy her emails). I'm asking for proof of an
| affirmative. That Tether _does_ have funds to back it 's
| liabilities. Should be easy. Bring in KPMG, show them
| your bank accounts and have them attest to it.
|
| If they do that I'll shout how wrong I was from the
| rooftops. I'm only asking them to follow through on their
| numerous, repeated promises over a half decade.
|
| "We are aware of online discussions about Tether's lack
| of publicly-available audits. Periodic audits of our bank
| balances have been performed by the Taiwan-based auditing
| firm TOPSUN CPAs & Co. The results of those audits were
| for the benefit of shareholders and were not in a form
| suitable for public consumption (to begin with, they were
| in Mandarin)" [1].
|
| ... they couldn't share these audits because they were in
| _Mandarin_?! Where on earth would they find a translator.
|
| [1] https://tether.to/tether-update/
| shobith wrote:
| What does tether have to do with bitcoin's block reward
| halving? I couldn't see any references to it here:
| http://github.com/bitcoin/bitcoin
| arcticbull wrote:
| The only reason the halving is at all relevant is that it
| affects the unit economics of bitcoin mining, which
| brings into the conversation the "value" of a bitcoin,
| which is determined by Tether. It's all connected.
| ceejayoz wrote:
| Bernie Madoff's scam lasted perhaps as much as 40 years.
|
| It was still a scam.
| hutzlibu wrote:
| And the catholic church is around even longer .. claiming
| to be the only ones who know the eternal truth. (luckily
| they lost power, so today they can only claim(mostly) and
| not enforce)
| shobith wrote:
| "tether bad, so bitcoin bad!"
| arcticbull wrote:
| It's not about good or bad. Bitcoin is bad because a
| transaction takes 700kWh and 87 grams of e-waste. It's
| staggeringly inefficient because trust is a huge
| optimization.
|
| Tether is bad. Where it intersects is it can create the
| impression people think Bitcoin is worth something in
| dollars.
| kinghajj wrote:
| How do you find that quote in the site?
| hanniabu wrote:
| It doesn't really show on mobile, you need to be on desktop
| to view it
| k00b wrote:
| Look at the coinbase data for the block
| ur-whale wrote:
| Sweet, and reminiscent of the message included in the initial
| block [1]
|
| https://en.bitcoin.it/wiki/Genesis_block
| empath75 wrote:
| So, pre halvening -- the average block reward was worth about
| $100,000. Fees totaled about $5,000.
|
| I don't really understand the economics of this, but it seems
| there are a few possible outcomes:
|
| A) Prices double because miners refuse to sell at a price that
| gives them less than $100k a block and demand for coins is
| inelastic.
|
| B) Fees go up 10x because miners now need to make $50k in
| transaction fees instead of $5k per block to make up for the
| lower block reward, and demand for transactions in inelastic.
|
| C) Difficulty and prices drop because neither transaction demand
| nor coin demand is inelastic, and miners will begin turning off
| rigs that are no longer profitable at $50k per block.
|
| D) Some combination of the above.
| kinghajj wrote:
| E) Most miners accept less profits than they had previously
| earned. Those that can no longer profitably mine shut down,
| causing a small dip in hash rate.
| duskwuff wrote:
| I wouldn't count on it being "small". Miners have always
| operated on the edge of profitability, and there's been a lot
| of consolidation in the cryptocurrency mining space over the
| past few years. It's entirely possible that this halving will
| force some major operators out of the market.
| tiborsaas wrote:
| It's pretty genius system if you think about it. Each of these
| halving events will shuffle the market players because
| different actors can be motivated by different incentives. If
| difficulty drops, then it might be an incentive for smaller
| players to enter mining again.
|
| It's a chaotic system by design which makes it really hard to
| predict what will happen in the long run.
| csomar wrote:
| Price dropped 50% recently and then tripled. There is no
| difference to miners between a 50% price drop and a halving. At
| least the halving is predictable but 50% discounts are not.
| People who are in this business are ready for volatility.
| rantwasp wrote:
| you should consider what the price to mine is vs the reward. as
| long as the reward > price to mine, the miners will keep
| mining. once it drops, you will either have miners dropping off
| the networks or the difficulty decreasing until another
| equilibrium is reached. once you have less miners it's possible
| that the TX fees will increase if you want your transactions
| mined (the miners cannot really impose a transaction fee. it's
| the transactions with the highest fees that get mined into a
| block and incorporated into the block chain)
| empath75 wrote:
| in a free market, the price for any commodity should roughly
| track the cost of producing it.
| rantwasp wrote:
| you're working with the assumption that it's a commodity.
| It's more like a currency than a commodity.
|
| also, is the price of gold for example really tracking the
| cost of producing it?
| masteranza wrote:
| Predicted by Lubos:
| https://motls.blogspot.com/2020/05/may-11th-12th-could-be-gr...
| jameslevy wrote:
| Everyone thinking this seems to have resulted in it happening a
| couple days early. It's not yet clear whether today or tomorrow
| is a good time to short BTC.
| [deleted]
| ur-whale wrote:
| Interesting to see what will happen to Bitcoin which slashed the
| supply in half exactly at a time when major currencies have fully
| open the supply floodgates because of Covid-19.
|
| If the law of supply of demand carries any predictive power, BTC
| should see a compounded rise.
| nas wrote:
| It will be interesting. The amount of fiat money being created
| right now is a bit crazy. Whether that is "good for Bitcoin" is
| not entirely clear. Bitcoin has failed to live up to initial
| hopes. Transaction fees are too high and throughput
| (transactions per second) is too low. In a way, it is victim of
| its own success, at least in terms of price per coin. The
| second layer protocols, like Lighting, were supposed to solve
| the fee and throughput problems. I've played with Lighting and
| when it works, it is amazing. However, it far from a simple and
| polished user experience. Maybe they will eventually get there.
| Or, maybe people will give up waiting.
| economicslol wrote:
| The supply isn't changing, only the rewards for mining are.
| digitailor wrote:
| A critical relevant fact is missing to help explain this. It
| screws up currency analogies, and that may be why people have
| asked for clarification.
|
| Bitcoin (BTC) is classed by the US Federal Gov't (IRS) as
| _property_ , not currency.
|
| That wasn't some kind of mistake or tax technicality on the IRS'
| part - a lot of analysis went into this in 2013, along with DHS
| and FinCEN. This is _the_ definition for BTC in the US.
|
| That means what happened today could be described as: The first
| and oldest decentralized, distributed, cryptographically-secured
| record of digital property ownership (Bitcoin as a network) is
| producing cryptographic keys (the property, BTC) at half the rate
| it was yesterday. There is now less of the digital property (BTC)
| being created by the network daily, and this is due to an
| artificial scarcity strategy built into the Bitcoin source.
|
| Hope that helps
| strgcmc wrote:
| Another way to analogize: imagine the westward expansion of the
| USA also being subject to "halvenings" like this. In years 0-9,
| settlers were encouraged/allowed to settle on 1000 miles worth
| of land (counting linearly westward), then years 10-19 only 500
| miles further, than yes 20-29 only 250 miles further, etc.
|
| Early settlers are incentivized to grab large swathes of land
| quickly and cheaply, to get the system bootstrapped. Later
| settlers have to fight over smaller tracts of land, because
| after all the land is finite (you eventually reach the ocean).
| However, the land is also nicely divisible into smaller and
| smaller sub-plots, so units can be adjusted as needed.
|
| The rules by which this "westward expansion" are governed are
| written into the Bitcoin protocol. But unlike land and the
| ocean which are natural facts for the most part that we take
| for granted a priori, with Bitcoin the "border"/limit here is
| also defined as a theoretical construct (and hence, could
| theoretically be changed, but this would be a hard fork and
| people would have to reevaluate the value of a new network with
| a new set of boundaries/rules).
| banku_brougham wrote:
| What is the current rate of growth of bitcoin purchase
| transactions, preferable time series history?
| scottmsul wrote:
| HN discussions from past halvings:
|
| 2012 - https://news.ycombinator.com/item?id=4842947
|
| 2016 - https://news.ycombinator.com/item?id=12061618
| vmception wrote:
| that is a treasure trove!
|
| the top comment on the 2012 one was about someone seriously
| concerned about the 2.8GB blockchain download to get started,
| and a debate about the scalability of bitcoin.
|
| since then:
|
| - light clients have been created. no mobile or desktop user
| worries about blocks, keeping only references to a few prior
| blocks.
|
| - merchant services which are full nodes use pruned clients,
| which mean their servers only use 25gb or so. (while the
| blockchain is 10 times larger)
|
| - compression of transactions have improved, so each tx takes
| up less space on the blockchain.
|
| - validation time of the blockchain is much faster, even if you
| have to download the whole thing from scratch
|
| - there is still a large and growing community of actually full
| nodes that do invest in the appropriate hardware for
| decentralization.
|
| - and mining full nodes and their pools have fierce competition
| to keep their constituent miners, continually distributing
| transaction validation even if the pool operator is just a
| centralized single full node.
| [deleted]
| mrunkel wrote:
| Does anybody actually use bitcoin? And by use I mean transact
| actual business, and not just speculate. You know, buying and
| selling real world goods and services.
|
| Or is it like gold reserves, people just hoard these digital
| numbers until they are ready to cash out.
|
| I'm really curious for the hoarders, if they're doing it as a
| hedge against global financial collapse, how exactly do they
| expect to redeem their bitcoin for anything tangible?
|
| These are serious questions, I've given bitcoin only a minimum of
| thought. It seems a great way to move value out of a closed
| economy like China, or for drug dealers to move cash across
| borders, but who else uses it?
| rglover wrote:
| I've held for several years now (~7 or so). My logic is this:
|
| 1. This is all 100% speculative at the moment. Anyone who tells
| you otherwise is a charlatan. You may make someone money if
| you're patient, but the point is acquiring a decent stake while
| it's still affordable on the off (IMO, not 0%) chance that
| Bitcoin or one of its derivatives become a secondary and then
| primary spending currency. Realistically, I see a boondoggled
| attempt by governments to create their own digital currencies
| with Bitcoin being used primarily as a store of value, a la
| gold.
|
| 2. Technologically, Bitcoin is an intelligent solution to the
| financial problems created by government mismanagement and
| greed. It's not perfect, but it's pretty damn creative. With
| time, most of the major issues seem to be fixable.
|
| 3. Also technologically, Bitcoin is _not_ ready for the prime
| time. The lightning network being implemented at a large scale
| would be the first warning shot that Bitcoin could see massive,
| stable use. Until you match transaction volume of Visa, Amex,
| etc., it 's not going to take.
|
| 4. The likely timeline this plays out will be loosely
| correlated with the government's intervention negatively
| impacting the purchasing power of the dollar (speaking relative
| to the U.S.). The current situation is actually surprising; I
| didn't expect anything like this to happen for at least another
| 2-3 years.
|
| 5. Due to the way that humans tend to overestimate change in
| the short-term, the likely timeline for this to all play out is
| throughout the 2020's and early 30's, with the mid-to-late
| 2030's being the "even grandma pays with Bitcoin" moment. I'd
| say right now is the 97'-98' era for Bitcoin if we're using the
| internet as a parallel.
|
| 6. The current marketing and messaging of Bitcoin is, to be
| blunt, a freakshow. Painful as it may be, normal folks don't
| want to be associated with things that seem grimy, shifty, or
| subversive. The only way to overcome this is to demonstrate
| that using Bitcoin is easier than the current payment options,
| or, not having it would mean seeing all of your financial
| assets rapidly devalue downward toward 0 (which means the U.S.
| is collapsing and is a whole other bag of chips).
| this_user wrote:
| The fact is that adoption times for new technologies have
| only become shorter over time. Modern smartphones came to the
| market at about the same time as BTC, and they have been
| ubiquitous for years now. Docker was first released 2013, and
| has been everywhere for a couple of years. If Bitcoin were
| actually useful, someone would have figured it out by now,
| and it would be widely adopted. But it's not, because it is
| fundamentally flawed in a way that cannot be fixed without
| starting over completely, if at all. It's a barely
| functioning CS experiment with little to no real world
| usefulness. And pretty much everything that came after has
| turned out to be either even more broken, or was an outright
| scam.
|
| > Technologically, Bitcoin is an intelligent solution to the
| financial problems created by government mismanagement and
| greed.
|
| That is complete nonsense. Bitcoin solves no actual problems,
| and instead tries to revert back to a previous monetary
| system that was abandoned because it was failing. The
| consensus among economists is that a deflationary currency is
| a terrible idea. This is the equivalent of medicine going
| back to routinely performing lobotomies: it doesn't solve
| anything, but causes a huge amount of harm.
| DarthGhandi wrote:
| > barely functioning CS experiment
|
| Zero downtime since 2013. Visa has ten hour outages across
| entire continents.
|
| > Bitcoin solves no actual problems
|
| It's been moving billions of USD daily without fail for
| years. That's a non-trivial amount to anywhere on Earth.
| Try transferring money from say former Soviet bloc
| countries to Africa.
|
| > The consensus among economists is that a deflationary
| currency is a terrible idea.
|
| Bitcoin is inflationary until 2140 and then stops
| inflating. It's not a deflationary currency. Perhaps you
| meant to word this differently?
| [deleted]
| artursapek wrote:
| I bought my wife a painting (~$3k USD) with Bitcoin. I also
| receive part of my salary in Bitcoin. Primarily, I hold it
| because it's better than holding USD.
| cblackthornekc wrote:
| I used some of the lumens that I got through keybase. Mostly
| because I was buying something online and saw crypto as a
| payment option.
|
| But out of all the people I know with crypto, they treat them
| like potions in Skyrim. One day, I'll need all of these
| different coins. Until then I'll just hold them in my wallet.
| liquidify wrote:
| No, the maintainers have purposely neutered its usability in
| favor of it becoming a "digital gold" or a "digital reserve".
| Fees are far to high for common uses, and this is entirely
| intentional. If you are looking for usable crypto currencies,
| you should look at Ethereum, Bitcoin Cash, Monero, or many
| others who have set up their chains to accommodate actual day
| to day use.
| sillysaurusx wrote:
| Isn't it a myth that fees are too high? $0.05 seems to get
| you in and verified within an hour, if I remember correctly.
| chipperyman573 wrote:
| They haven't been that low in a long time. Current fees are
| about $2-3 https://www.blockchain.com/charts/fees-usd-per-
| transaction
| dangwu wrote:
| Waiting more than a few minutes eliminates all in-person,
| food delivery, and probably most same-day delivery
| transactions. Who's going to wait an hour for the purchase
| to go through for an Uber Eats or Prime Now delivery?
| Zarath wrote:
| A vast majority of transactions don't need to wait for a
| full confirmation, simply existing in the mempool is
| enough. Just like my electric bill doesn't need to wait
| for the ACH transfer to complete before it's considered
| paid.
| xur17 wrote:
| And I'd argue that credit card transactions don't settle
| for somewhere ~90 days (if even then).
| dangwu wrote:
| The blockchain has no support for this kind of feature.
| That's rather antithetical to Bitcoin. How do you propose
| to achieve this without a central bank figure?
| xur17 wrote:
| The "blockchain" doesn't need to support this - the GP's
| point is that transactions don't need to irrevocably
| settle for all transaction types. If you're spending $5
| to buy coffee, the chance that you are going to defraud
| the store is low, and there are a number of less complex
| ways you could accomplish this anyways (just take the
| item off the shelf, and leave without paying).
|
| And I'll note that there are other ways to accept bitcoin
| payments without high fees or long wait times
| (lightning).
| dangwu wrote:
| I strongly disagree. I think you are overestimating the
| morality of the common man. If you enable anonymous
| purchasing of items with no proof of funds being sent, it
| will be abused. A lot. No storefront will sign up for
| this. This is very different than physical shoplifting.
| X6S1x6Okd1st wrote:
| I have some shocking news for you about how most sit-down
| restaurants sell food...
| xur17 wrote:
| It's not anonymous if you're standing in the store
| paying..
| dangwu wrote:
| It's anonymous enough if you never reveal your identity.
| It would be like driving somewhere, paying cash, then
| later the cash is revealed to be fake. And there's no way
| for the storefront to test for legitimacy until an hour
| later.
| xur17 wrote:
| So, like credit cards (could be stolen, chargeback risk,
| etc).
| dangwu wrote:
| 1. Credit card fraud is an extremely small percentage of
| credit card activity. What you are proposing would likely
| not be.
|
| 2. Chargebacks are disputed, and as a storefront you can
| prove that you are not liable. Merchants can review the
| identifying documents of the cardholder for legitimacy
| and take other security steps, like using a chip-enabled
| card terminal, to further confirm the validity of the
| purchase. If they follow the process correctly, they are
| not liable for fraudulent purchases, the cardholder's
| issuing bank is. Visa and MasterCard's contracts
| generally put the burden of fraud reimbursement onto the
| bank.
| beervirus wrote:
| You're off by a factor of 50.
|
| https://bitinfocharts.com/comparison/bitcoin-
| transactionfees...
| X6S1x6Okd1st wrote:
| Median looks a bit better ($1.17 for last value, compared
| to $1.92) both are far from $0.05
| vmception wrote:
| or you just spend once to make a lightning connection and
| spend for much less and faster?
|
| or use any other blockchain?
| beervirus wrote:
| Yes, there are indeed other options. Like cash or a
| credit card.
| vmception wrote:
| people write to blockchains for more reasons than
| payments.
|
| there are equivalent costs in dollars to perform this
| action, which I thought we were talking about here.
|
| lightning has limited utility though! does have lower
| tail end costs
| [deleted]
| heavyset_go wrote:
| Recently a shop had a ~15% off sale if you paid in Bitcoin.
| Considering taking advantage of it, I did some research and
| even bought a small amount of Bitcoin to test it out.
|
| Purchasing Bitcoin legally is a pain. If you have an online
| bank account, most of them do not allow cryptocurrency
| purchases via debit or credit. Even some traditional banks will
| not allow cryptocurrency purchases via debit or credit. If you
| have to go the route of bank transfers, you'll have to pay
| transfer fees and sit through 1 - 3 days of BTC price
| fluctuations. If you want to use cash or bank deposits via
| LocalBitcoins, you'll be paying a significant markup over
| Bitcoin's trading price, and most sellers have a KYC policy
| that would allow them to easily steal your identity.
|
| Say you have a credit or debit card that can be used to buy
| cryptocurrency. Registering with an exchange is a hassle
| requiring a camera, a phone and multiple forms of photo ID.
| There is a waiting period before being allowed to purchase
| cryptocurrency. Exchange fees are high, as are transaction
| costs. I bought a small amount of BTC and wasn't allowed to
| transfer it from the exchange for 24 hours because of fraud
| protection.
|
| I did the math and I would lose more than the 15% discount
| would have saved me just by buying and transacting with
| Bitcoin. On top of that, the entire process was unpleasant.
| wiml wrote:
| I've bought a handful of ordinary things (bookshelves, a
| t-shirt, tire chains, coffee and pastries) with bitcoin, just
| for the heck of it. These are real-world things I would have
| spent other kinds of money on if I couldn't pay with bitcoin. I
| used bitcoin for its novelty.
|
| Bitcoin itself is obviously unsuitable to replace cash (or
| banks, etc) in general, but I've been fascinated by
| cryptocurrencies since the David Chaum days, so I like to play
| with it. Speculating on it is more effort than it's worth, to
| me.
|
| My USD$25 in bitcoin holdings did require me to check a box on
| my tax forms this year, though...
| brendanw wrote:
| I use USD-C and DAI to give out grants to a team of
| international volunteers. Could not get payments to a guy in
| Turkey through venmo, paypal, square cash, or transferwise. Now
| we just send everything via stablecoins.
| auston wrote:
| I have friends in VZLA that use it in the current cash crunch /
| hyper inflation. Also know people in Peru/Colombia that use it
| as a transport layer to get money home into Venezuela.
|
| Also, see valiu.co
| opportune wrote:
| People certainly used to use it before transaction fees became
| too high. It saw a lot of real use in dark net markets which
| AFAIK now use more privacy-preserving coins, since the bitcoin
| blockchain is simply pseudonymous. For regular payments Bitcoin
| has some tradeoffs, theoretically the high hash power makes it
| "safer" (though it's quite consolidated), it's somewhat less
| volatile than other coins due to trading volume, but its fees
| are quite high. It's basically dead for on-chain transactions
| under a certain amount.
|
| Personally I think Bitcoin has great historic value and may
| become a collector's item similar to how a denarius still has
| value now, but its properties make it pretty bad for everything
| you would want a currency to be, except that it's deflationary
| and well-known. For anything you would want to do with it other
| than speculate, there is probably a better cryptocurrency
| (based on the actual tech/design of the currency) or non-crypto
| tool - it's like the Model T of crypto.
| marcrosoft wrote:
| People hold gold in order to protect themselves against
| "unprecedented times". You don't need a full monetary collapse
| to make a profit. They are volatility harvesting and cashing
| out many times over a long period of time and rebalancing into
| other assets.
|
| Modern portfolio theory says you can't predict the market;
| however, you can be absolutely certain people in a group will
| overreact and over buy or sell an asset group. This is a well
| studied fact. You can capitalize on this. It's called
| volatility harvesting. Look into risk parity portfolios. That
| said if everyone did this, the hard stance on modern portfolio
| theory would hold true. At this time humans aren't capable of
| acting rationally as a total group.
| abstractbarista wrote:
| Yes, to buy huge amounts of things you can't easily (or safely,
| while retaining your freedom) get with credit cards, cash, etc.
|
| I leave it to you to guess what those things are. BTC is about
| spending freedom. It and cousins like XMR, etc. are becoming
| better at it every day.
| Geee wrote:
| Lots of people use it for legitimate business. It's not that
| uncommon to see it as a payment option online and I use it
| because it's more convenient and more secure than a credit
| card. For example, I frequently use Bitcoin to pay for domains
| on Namecheap.
| vmception wrote:
| namecheap's bitcoin integration is the worst
|
| and I only know, because I use bitcoin!
|
| does dude expect an article every time someone does?
| Acrobatic_Road wrote:
| Bitcoin is useful for when other payment methods are made
| impossible by financial censorship. For example, if you want to
| buy a 4chan pass you _must_ pay with digital currency (Bitcoin,
| Bitcoin Cash, Ethereum and Litecoin).
| seibelj wrote:
| Bitcoin is "hard money", the hardest the world has ever seen.
| People prefer to spend softer money (like paper currency) and
| hoard hard money (Bitcoin, gold).
|
| If there was money less trusted than the US dollar that was
| widely accepted, and US citizens had it, they would choose to
| spend that money before US dollars.
|
| In countries with very poor fiat currencies, people will hoard
| USD and spend their local fiat currency where ever they can,
| only spending their USD when they are forced to, because it's
| better money.
|
| Governments still demand payment in hard money. Venezuela has
| been raiding their gold reserves to pay Iran for gasoline
| https://www.aljazeera.com/ajimpact/maduro-tap-dealmaker-sanc...
| dylkil wrote:
| >Bitcoin is "hard money", the hardest the world has ever seen
|
| This is true in more than one way. with a 350k daily
| transaction limit, the more people that try to use it as
| money, the harder it is to use as money.
| kinghajj wrote:
| I'd guess a lot of "hoarders" of BTC are in a similar boat to
| me: mined/bought some in the early days (pre-2013), and have
| recouped their initial investments and then some, and still had
| some left over. I'm not holding it as a hedge per se, but more
| as part of a diversified portfolio, with set exit points to
| rebalance into other assets.
| criddell wrote:
| In the early days, Nakamoto wrote to somebody and said Bitcoin
| can scale larger than VISA for a fraction of the cost. Was he
| wrong about that, or has something changed since then?
| zhoujianfu wrote:
| No, he was right.. what changed since then was who maintains
| bitcoin. They stubbornly refuse to raise the max block size
| past 1MB, despite Satoshi putting it in as a temporary bug
| fix back when the average block size was more like 1KB.
| Bitcoin could easily scale larger than visa with sub-penny
| fees today simply by upping or removing a hard-coded
| constant. It's insanity imho.
| jephir wrote:
| Actually the same person is maintaining Bitcoin. Satoshi is
| Adam Back, co-founder and CEO of Blockstream.
| gen3 wrote:
| I don't know about that.
| pixelpoet wrote:
| Citation needed.
| [deleted]
| chrisco255 wrote:
| VISA scale is roughly 10,000 transactions per second. If you
| count Lightning network, that's theoretically possible, but I
| don't think the network is currently doing anywhere near that
| and has some scaling and liquidity issues from what I
| understand. Maybe it will get there, but it's not there yet.
|
| As for fees, however, Bitcoin does not care how much BTC
| you're sending in a single transaction, whereas VISA charges
| 1-2% as a fee. So, if you want to transact in large amounts
| (tens of thousands to millions of dollars) across borders,
| it's hard to beat Bitcoin.
|
| Personally I have more faith in Ethereum community to solve
| the scalability problem with blockchain vis-a-vis zkRollups,
| Optimistic Rollups, and Sharding. Ethereum already scales to
| 2,000 TPS and after ETH2 is launched, will exceed 100K
| transactions per second.
| [deleted]
| hocuspocus wrote:
| > So, if you want to transact in large amounts (tens of
| thousands to millions of dollars) across borders, it's hard
| to beat Bitcoin.
|
| No, it's actually very easy. Moving 100k across borders
| with a SWIFT transfer would cost me $20-30 (and I'm a
| nobody, someone doing that a lot would switch to a business
| account and pay maybe half of that). And if you time it
| well (i.e. during office hours for the emitting,
| intermediary and receiving banks) it shouldn't take more
| than a couple hours.
|
| And that's using USD. Switch to Euro as your medium and now
| it's costing you literally nothing or a few cents.
| chrisco255 wrote:
| Ok, you try sending $50K or $500K to Argentina or Russia
| or China and let me know how quick your transaction goes
| through.
| doyoureallytnot wrote:
| > it shouldn't take more than a couple hours That's
| simply not true. It takes days for most banks to "settle
| their books", before which any money they've transferred
| hasn't really gone anywhere.
|
| For day-to-day expenses for us common folk that's not
| really a concern but for big sums of money the recipient
| will want a little more certainty of the transaction
| having completed.
|
| This can take weeks with some banks too.
|
| (Source: I work for a major bank)
| chrisco255 wrote:
| This is another good point. Even for day-to-day
| transactions, VISA is not instant. The only thing that's
| instant is the authorization that you can spend X amount
| of money. But the actual transfer of funds from customer
| account to merchant account takes days. Whereas, again,
| with Bitcoin or crypto, it's minutes to settle.
| dylkil wrote:
| >Was he wrong about that, or has something changed since
| then?
|
| Nope he was right about that. What changed is blockstream
| took control of bitcoin development. They dont agree that on
| chain scaling is possible, and instead push proprietary
| alternatives to scale bitcoin where they can extract fees.
| economicslol wrote:
| I'm sure the majority of volume is from speculators. I think
| Bitcoin really is basically a Digital Gold, with a finite
| supply and creation rate.
| yreg wrote:
| Well, yes, and the same could be asked about gold...
|
| >Does anybody actually use gold? And by use I mean transact
| actual business, and not just speculate.
| economicslol wrote:
| Well that's the point. The right way to think of bitcoin is
| a digital version of gold. It's mostly being used for
| speculation and as a store of value by some.
| Zarath wrote:
| Does anyone actually use stocks? I mean, it's not like I
| can show up at AAPL and demand their espresso maker because
| I own enough shares of their stock. The "partial ownership
| of the business" is a complete myth. In reality, unless a
| corporation pays a dividend, or goes bankrupt and is
| liquidated and shareholders are paid, stocks are just
| liquid vehicles of speculation.
| svachalek wrote:
| Stocks don't purport to be currency though.
|
| The question about gold is more fair. There have been
| times when actual gold coins were used as currency, and
| until 1971 the dollar was on a gold standard, meaning
| dollars gained at least some of their credibility from
| the fact they could be traded for a fixed amount of gold;
| i.e. paying in dollars was in effect paying in gold.
|
| But now, no, gold's status as a "currency" is mostly from
| tradition. Still, it's relatively easy to use and its
| value is comparatively stable. And people can't just up
| and make a new one at any time.
| artursapek wrote:
| Over time I think it became clear that Bitcoin was
| misnamed. If it's like any coin, it's a $1700 1 oz Gold
| coin - not the nickels and dimes people generally think
| of. It's a great store of value (if you have a strong
| stomach to short-term fluctuation) but not great for
| small transactions.
| chrisco255 wrote:
| I bought gold with Bitcoin the other day, but I find it
| difficult to do the reverse.
| danans wrote:
| > Well, yes, and the same could be asked about gold...
| >Does anybody actually use gold? And by use I mean transact
| actual business, and not just speculate.
|
| Well, in some parts of the world (most notably South Asia,
| but elsewhere too), gold is used to varying degrees to
| "transact" marriages, so there's that. I've never seen a
| wedding ring made of BTC, but that would be an interesting
| bit of performance art ;)
| colechristensen wrote:
| It is used as a toy, as speculation, for criminal activity, and
| for money laundering.
|
| There is not much actual legitimate usage. It is pretty bad for
| privacy as the whole idea is that the entire transaction
| history is public and permanent.
| tradertef wrote:
| They said the same thing for Internet. It is used for p*rn,
| drug-dealing, etc.
| khazhoux wrote:
| No -- since the early days of the "World-Wide Web", there
| were plenty of uses: colleges all hopped onto it,
| entertainment websites popped up, the first version of IMDB
| was mind-blowing, Yahoo! v1.0, James Berardinelli's movie
| reviews site... the list goes on and on.
|
| Anyone saying it was just porn and drugs would just be
| disingenuous.
|
| But Bitcoin, I'm not sure I've encountered a single "Pay
| with Bitcoin" option in any online shopping I've done. So
| where are the legit use cases hiding?
| denysvitali wrote:
| In Switzerland you can pay for transportation (mainly
| train) tickets with Bitcoin, if you fancy
| reidjs wrote:
| I sold a motorcycle over craigslist a couple years ago
| and I would have much preferred to have the buyer send me
| bitcoin instead of giving me stacks of 50s. I wasn't able
| to demand a cashiers check and I wanted to make sure the
| sale would go through that day. Cryptocurrencies are
| amazing for large (legit) p2p transactions.
| khazhoux wrote:
| What would have been better about BTC for that instead of
| cash? Just the PITA of having a giant pile of physical
| money to deal with?
| iamthirsty wrote:
| > There is not much actual legitimate usage
|
| To make an definitive statement like this, with no sources,
| shows the inherent bias you have.
|
| In reality, apparently a lot of people use BTC for quite a
| bit of actual business.[1][2]
|
| [1]: https://bitpay.com/blog/bitpay-growth-2017/ [2]:
| https://news.bitcoin.com/bitpay-reports-processing-
| over-1-bi....
| colechristensen wrote:
| Bitpay claiming to be the largest payment processor
| bragging about $1 billion yearly transaction volume.
|
| The trading volume _yesterday_ on the other hand was nearly
| $2 billion.
|
| So that would mean that the demand for bitcoin in bitcoin
| markets for _actual usage_ of bitcoin is one part in 700?
|
| I think that counts as not much actual usage.
| aianus wrote:
| FYI the trading volume on global forex markets (fiat
| currency pairs like EUR/USD) is $5 trillion/day, while
| global GDP is ~$0.2 trillion/day.
| pixelpoet wrote:
| There are lots of trading bots shuffling amounts back and
| forth without actually buying anything. High speed
| trading is no different, it's not like the computers are
| buying, say, actual physical bananas; they are just
| trading back and forth.
| hanniabu wrote:
| Would you happen to know the ratio of dollars traded vs
| spent?
| rosywoozlechan wrote:
| I believe I've read about people in developing countries with
| high inflation in their government's currency rely on bitcoin
| but I don't know how true that is. I've never bought anything
| with bitcoin and I hope I never have to.
| Nursie wrote:
| This appears mostly to be wishful thinking by bitcoin
| gamblers in non-developing nations.
| colechristensen wrote:
| Which in most cases wouldn't be legal locally, which fits
| under money laundering. Morality might be a little more
| indeterminate depending on the situation.
| reidjs wrote:
| See Venezuela
| vb6sp6 wrote:
| > as speculation, for criminal activity, and for money
| laundering.
|
| you are thinking of the US Dollar :)
| jes5199 wrote:
| I _have_ used it - for example, Visa/Mastercard won't allow you
| to buy marijuana seeds, even in jurisdictions where it's legal,
| so crypto is great for that.
|
| But over the last few years, bitcoin has gotten _harder_ to use
| for transactions, as the blockchain has gotten more crowded. In
| theory, the "lightning network" is fixing that problem, but at
| this point I usually transact in other cryptocurrencies - there
| are plenty of them that have stable enough prices for that! But
| I still own bitcoin as speculation and as a sort of savings
| account :shrug: It's been a good investment so far
| nas wrote:
| I use Bitrefill to buy pre-paid credits from my daughter's
| mobile phone. Paying with Lightning gives me a small discount
| and the payment process is easy. I use the "Bitcoin Lightning
| Wallet" app on my Android phone (BLW). I had to transfer some
| coins into the wallet initially and then use some of those
| coins to "open a lightning channel". Once that's done, paying
| for something on Bitrefill takes a couple of touches. The
| transaction completes nearly instantaneously (like less than 10
| seconds) and the fees are small (0.1% fee on 15 USD payment).
|
| Ease of use for Lightning is not to the point where I think it
| is good enough for the average user. However, in the early days
| getting on the Internet was also not easy (remember dialup, PPP
| and SLIP? I do). I think Lightning is interesting because
| anyone has the ability to set themselves up as a merchant and
| receive payments. Right now it is complicated and a bit clunky
| but it is actually possible.
| iamthirsty wrote:
| According to BitPay-a merchant/consumer Bitcoin processing
| application--they've been processing >$1B in transactions for
| the past few years.[1][2] That is just from one centralized
| service, and there are many other similar ones, private
| transactions, etc.
|
| So, to answer your question, yes, apparently a lot of people
| use BTC for conducting actual business.
|
| [1]: https://bitpay.com/blog/bitpay-growth-2017/ [2]:
| https://news.bitcoin.com/bitpay-reports-processing-over-1-bi...
| ChrisArchitect wrote:
| the fact that I can't see a straight answer to the general
| question about 'what does this mean simply' or attempt at some
| clarity that isn't followed by some argument or pitch or slag off
| of something response is ridiculous and sums up the world of
| bitcoin
| llamataboot wrote:
| TLDR: mining rewards should pretty much have no effect on BTC
| price
|
| We're years into bitcoin and I feel that people still don't
| understand the basic premise that with an adjusting difficulty it
| literally doesn't matter how many people want to mine. Difficulty
| will adjust to about the break even point for miners that can run
| at scale (likely in a place with cheap electricity).
|
| The price of bitcoin is still based on supply and demand for
| bitcoin. Whatever THAT clearing price is will determine whether
| or not it is profitable to mine. If it is not profitable to mine,
| miners will drop out until the difficulty level falls enough that
| it becomes profitable again.
| konschubert wrote:
| Importantly, with the reward being cut in half, difficulty
| should go down.
| qorrect wrote:
| Competition or difficulty ?
| insulanian wrote:
| > TLDR: mining rewards should pretty much have no effect on BTC
| price
|
| Miners will want to cover the cost of mining, and to achieve
| that they will want to sell coins for higher price than they
| were selling it before for.
| aazaa wrote:
| The page lists "Coinbase Transaction" in the quantity 7.15968084
| BTC.
|
| The coinbase transaction is the first one listed in the block. It
| has no explicit payer, and can be valued up to/including the sum
| of:
|
| - the block's aggregate transaction fees
|
| - the block subsidy (6.25 BTC starting with block 630,000 today)
|
| There's some technically detailed information on coinbase
| transaction/money stock edge cases that have occurred over the
| years here:
|
| https://bitcoin.stackexchange.com/a/38998
|
| Also see this discussion of a jaw-dropping miscalculation of the
| block subsidy (even though dated April 1, it's for real):
|
| https://github.com/bitcoin/bips/blob/master/bip-0042.mediawi...
| nikivi wrote:
| Would it mean there would be less interest in mining bitcoin (and
| thus 'wasting' electricity)?
| X6S1x6Okd1st wrote:
| Only if mining has hit an equilibrium where it's entirely price
| dependent. If mining is constrained by supply (either of
| sufficiently cheap energy or of miners) then we wouldn't see a
| drop.
|
| Fees are still not near dominating the rewards so we do expect
| to see miner revenue drop due to this.
| nikivi wrote:
| But there will be a point in future where mining no longer
| would make sense? Curious if there are any projections when
| that is expected to happen.
| GuB-42 wrote:
| As long a s Bitcoin has value, mining will always make
| sense.
|
| First thing, even if the block reward is zero, there are
| still transactions fees. We are not here yet but they are
| expected to be the primary motivation in the future.
|
| Second, difficulty scale proportionally to the global
| mining power so that one block is mined every 10 minutes or
| so. As rewards decrease, the most expensive mining
| operations will shut down, keeping the cheaper ones
| profitable. An equilibrium will be found.
|
| The last point is a problem as it makes the network more
| centralized, potentially allowing for 51% attacks.
| lftl wrote:
| Presumably fees will rise at that point to making
| profitable enough to move transactions.
| fiter wrote:
| While I can understand the presumption that fees will
| rise to make it profitable to move transactions, is there
| any simple market mechanism for making sure transactions
| move safely? A slow continuous drop in hash rate could
| result in the network being more vulnerable to attacks.
| X6S1x6Okd1st wrote:
| Depends entirely on your operating cost and expected
| return.
|
| We know that the expected return from newly minted bitcoins
| will reach zero at some point in the future.
|
| We don't know if expected return from tx/fees will ever hit
| zero.
|
| TBH if it ever got back to the point where I could mine a
| block every couple weeks with a GPU, and I had access to a
| GPU, power source and internet connect I'd probably start
| mining again.
|
| IMO Bitcoin exists as an interesting and historical concept
| in too many people's minds for mining to ever stop. The
| real worry would be that mining drops off to the point
| where 51% attacks are viable on the bitcoin mainnet.
|
| We'd potentially see that if many large miners either
| started renting out their services to the highest bidder or
| sold all their miners. Once we see more hashpower for rent
| or purchase than goes into honest mining we have the
| potential for a 51% attack.
| GhostVII wrote:
| For all Bitcoin miners to be profitable, the global reward for
| mining Bitcoin must be less than the global cost. Since the
| reward has now halved, I think the electricity spend should
| also drop by half, but this may already be accounted for since
| miners have known about the halvening for a while and should
| have reduced capacity accordingly already.
| jcranmer wrote:
| > Since the reward has now halved, I think the electricity
| spend should also drop by half
|
| I doubt that. Look at the recent oil production issues:
| despite demand falling off a cliff, and the price of oil
| following it, production (supply) hasn't dropped anywhere
| near enough to match the fall in demand. It's basically a
| game of chicken--keep going at full force, eating your
| losses, in the hopes that your competitors are weaker and
| will be forced to fold before you will.
| PopeDotNinja wrote:
| Tommorow it will cost twice as much to mine the same amount of
| Bitcoin that you would have mined yesterday (I think).
| lozf wrote:
| Well, the cost stays the same, but the reward is halved -- so
| yes the effect is similar to each costing double, but that's
| not really precise.
|
| It's better to consider it as miners subscribe to a lottery
| (for the cost of their electricity). Roughly every 10 minutes
| someone wins that "block". Yesterday the reward for winning
| was 12.5 BTC per block, and now it's 6.25... the cost of
| entering hasn't changed.
|
| There's more to it of course, e.g. as the difficulty adjusts
| as in line with the hashrate on the network, but lagged by
| roughly a couple of weeks worth of blocks being mined. Fees
| in any given block vary, which are added to the block reward.
| Many miners pool rosources and each share a fraction of the
| reward. Etc.
| kinghajj wrote:
| I'd assume any miners who cannot profitably operate with the
| new block reward * price would stop, but a decrease of new
| supply should cause some increase in price too.
| GhostVII wrote:
| I don't think we should expect an increase in price given
| that the halvening is well know and predictable. It should be
| priced in, if anything I think it would be overvalued because
| of it since lots of people are buying in because they expect
| a spike in price.
| new2628 wrote:
| No need for quotes, it is an absolute waste of energy and
| effort on a planetary scale with no benefit whatsoever.
| new2628 wrote:
| Vote away, hurt bitcoiners.
|
| EDIT: sorry for the silly remark, ironically, the original
| comment stands at +10 at the moment after starting deep in
| the negative.
| kinghajj wrote:
| Only this comment, since it's so immature.
| banachtarski wrote:
| It's an "extreme statement" but to be honest, I'm inclined to
| agree. As a currency, it's an absolute failure. Far too
| volatile, illiquid, and unregulated to be even remotely
| usable/reliable. As for everything else? It's still looking
| for a "solution" that isn't just something hype driven.
| 535188B17C93743 wrote:
| Unfortunately, its technology (or maybe the combo of its
| popularity and technology) never really allowed for it to
| become anything but a speculative asset.
| nikivi wrote:
| Do you have any thoughts on what would make a better
| cryptocurrency? Either in the works and what works already?
|
| Perhaps things like Cardano (https://www.cardano.org) or
| Polkadot (https://polkadot.network) are better?
| wyldfire wrote:
| > no benefit whatsoever
|
| Clearly, the benefits for any energy consumption should be
| seen from the point of view of the consumer. They wouldn't do
| it if it were of no benefit.
|
| It would be more fair for you to describe the distributed
| ledger clearing as of no value to you. Because it definitely
| has a value to some folks.
|
| That said: some other cryptocoins do indeed provide a ledger
| like bitcoin, still decentralized and trustless, but without
| mining (and without block rewards).
| dang wrote:
| Can you please not take HN threads further into flamewar like
| this? It's bad for curious conversation. Generic discussions
| that have been repeated many times already never lead
| anyplace new; especially not indignant generic discussions.
|
| https://news.ycombinator.com/newsguidelines.html
| EthanHeilman wrote:
| Conventional wisdom says no, decreases in the national currency
| value of bitcoin would reduce interest, but the halvening
| won't.
|
| The reason why is that electricity for mining is priced in
| national currency, so interest in mining bitcoins depends on a
| miners future expectation of the value of bitcoin price in
| national currency when they sell the bitcoins to pay the
| electricity bill. The current wisdom is that the halvening
| decreases the amount of bitcoin that miners receive while
| increasing the USD value of bitcoin because it decreases market
| supply and the perception of market supply.
| lultimouomo wrote:
| But halvening happens on a fixed schedule, so all future
| halvenings are already priced in the value of Bitcoin in
| national currency. So if you get half the bitcoins for
| mining, ceteris paribus you are getting half the dollars.
| ufmace wrote:
| It's a disincentive towards mining bitcoin, yes. However,
| everybody knew this was coming now, so any competent mining
| operator should have already accounted for it in their
| financial/business planning.
| nas wrote:
| Likely yes but it depends on the Bitcoin price. The amount
| "wasted" (i.e. securing distributed ledger against attacks,
| providing difficult to fake notary service for transactions) is
| dependent on block rewards and fees. Since the block reward
| makes up most of that and has now been halved, you should
| expect less resources being put into mining (i.e. unprofitable
| miners will turn off their machines).
|
| If the price of Bitcoin now doubles presumably no miners will
| be turning off their machines. If it doesn't double, some
| fraction of all mining setups just became unprofitable.
| tromp wrote:
| One of Bitcoin's main goals is to fix the unpredictable and
| arbitrary emission in fiat currencies. But its finite supply,
| said to be modeled after Gold's, is questionable.
|
| Gold may have a finite supply, but it's been mined for millenia
| and has slowly increased its supply rate over time, and will
| likely continue to do so in our lifetime.
|
| In contrast, Bitcoin's emission which ranges from 2009 through
| 2140 is heavily tilted to the first few years.
|
| Its final century from 2040 through 2140 accounts for only about
| 0.5% of emission.
|
| The only point of the halvings is to be able to claim "finite
| supply". A constant reward would still have the yearly supply
| inflation rate (stock to flow ratio) going to 0, albeit more
| slowly. So crucially, supply would still be scarce, would be more
| predictable (time independent), more fair to late adopters, and
| be much closer to Gold's emission over our lifetime.
|
| It would also avoid the inherent instability [1] of mining
| rewards dominated by transaction fees, and avoid lengthening
| confirmation times to maintain security against doublespending
| [2].
|
| If we further consider the fact that coins inevitably get lost,
| then even a constant reward will yield a softcap of supply, where
| yearly emission merely serves to balance the yearly losses.
|
| Unfortunately, practically all cryptocurrencies subscribe to the
| notion that early miners must receive greater rewards, even when
| they often already enjoy lower difficulty.
|
| [1]
| https://www.cs.princeton.edu/~arvindn/publications/mining_CC...
|
| [2] https://www.coindesk.com/the-halving-exposes-bitcoin-
| to-51-a...
| cryptica wrote:
| >> Unfortunately, practically all cryptocurrencies subscribe to
| the notion that early miners must receive greater rewards, even
| when they often already enjoy lower difficulty.
|
| This habit of disproportionately rewarding early adopters is a
| universal feature of our economy and doesn't only apply to
| cryptocurrencies. The reason why it's like this is simply
| because it's extremely difficult to get any project or company
| off the ground; the risk of failure for an early adopter is
| ridiculously high so rewards also need to be ridiculously high
| to justify those risks.
|
| This is because most economic activity today is focused on
| seeking rents and building moats; so this has made the
| environment extremely adverse for newcomers; it lowered their
| probability of success and forced early adopter payoffs to
| skyrocket. We live in an age where the moats are so wide that
| that even offering customers a solution which is 10x better
| isn't going to cut it anymore in terms of being able to turn
| any profit.
|
| One might think that cryptocurrency would be immune to this;
| after all, the entire point of the blockchain movement was to
| fix such kinds of socio-economic problems - But having worked
| in the space for several years, I can say with confidence that
| incumbents in the cryptocurrency space have become part of the
| same problem which they were originally claiming to solve.
| Development in the space is slow, inefficient, lacks a clear
| vision and the incumbents of the cryptocurrency space lack any
| incentives to give newcomers a fighting chance. They will
| happily let the most promising new projects drown in the noise
| of popular mediocrity.
|
| The hypocrisy of it all is unmistakable. I've seen the ugliest
| side of human nature in this industry. That said I'm still
| cautiously optimistic but it's clear that something has to
| change at a social level in order to move forward.
| lisper wrote:
| > The only point of the halvings is to be able to claim "finite
| supply"
|
| The irony is that no matter what you do there will only ever be
| a finite supply of any currency, fiat or otherwise. It's a
| finite universe, so "finite supply" is inherently imposed by
| the laws of physics.
|
| > practically all cryptocurrencies subscribe to the notion that
| early miners must receive greater rewards
|
| That's the real objective. Like all startups, cryptocurrencies
| want to encourage early adoption by, among other things, FOMO.
| If there is no benefit to being an early adopter, no one will
| adopt early, and if no one adopts early, you will never get to
| critical mass.
| spraveenitpro wrote:
| So the newly minted 2T dollar bills printed by the fed is
| finite for you?
| dnautics wrote:
| Would you be happier if we said "bounded"/"unbounded" supply
| rwmj wrote:
| Why can't I just declare that I issue "TREE(3)" of my own
| fiat currency? There's finite supply only in some
| astronomical sense that computers would have difficulty
| storing bank balances represented in BCD or something.
| wnoise wrote:
| Because TREE(3) units are not well divisible. You can't
| give someone one and have the leftover amount representable
| with any reasonable amount of memory.
| SkyBelow wrote:
| >The irony is that no matter what you do there will only ever
| be a finite supply of any currency, fiat or otherwise. It's a
| finite universe, so "finite supply" is inherently imposed by
| the laws of physics.
|
| I'm not so certain that holds true. You could, in theory,
| either in a game or in real life, create a currency item that
| represents infinite currency. There would a finite number of
| physical representation of such items (if done is real life),
| and people would only place a finite value on it, but it
| would still representing an infinite number of whatever
| currency. You could even digitally create an infinite number
| of such infinite currencies.
|
| Depending upon exactly how they behave, it would quickly make
| the currency worthless about as fast as people conceptualized
| what infinite means, but at the core there would be an
| infinite amount of money.
| zby wrote:
| Well - ETH has infinite supply.
| saagarjha wrote:
| > Unfortunately, practically all cryptocurrencies subscribe to
| the notion that early miners must receive greater rewards, even
| when they often already enjoy lower difficulty.
|
| Well, it's a great way to get people to be invested in your new
| cryptocurrency.
| jron wrote:
| Bitcoin needed to bootstrap. Without reward subsidies halving
| there would be little incentive to invest early. See Grin:
| https://www.tradingview.com/symbols/GRINUSDT/?exchange=POLON...
| pal_9000 wrote:
| Good points. I haven't read the link but aren't you missing the
| equation of price economics? Bitcoin is only highly skewed for
| early miners only if they have held on to their rewards stash.
|
| Atleast what the designer intended/predicted if I remember
| correctly, is for the reward value over time to be the same.
| This is of course not backed by mathematical equation of sort.
| I would way super early mining is more similar to being the
| first employee of a startup that pays you in equity only.
| gridlockd wrote:
| The whole idea that Bitcoin will have a finite supply is
| nonsense. There's already dozens of Bitcoin forks, some of
| which lay claim to be the "one true Bitcoin". If the majority
| decides that whatever is now referred to as _the_ Bitcoin
| blockchain should not have a limited supply, so it will be.
| Ultimately, the ones calling the shots here are the same people
| receiving the block reward, so if transaction fees don 't make
| up for loss in block reward, what's to stop them?
|
| On a secondary note, who can claim that it is a good thing that
| money can't be printed if necessary? The crisis of 2008 was a
| liquidity crisis, without the ability to print money it
| could've turned into a great depression. Making the money
| supply fixed is just throwing out one tool out of the toolbox.
| cryptica wrote:
| >> The whole idea that Bitcoin will have a finite supply is
| nonsense. There's already dozens of Bitcoin forks, some of
| which lay claim to be the "one true Bitcoin".
|
| But there is a limited supply of user attention to be divided
| up between all available cryptocurrencies and it's not
| divided equally by any measure; so cryptocurrencies are
| constantly competing with each other for that attention and
| this is where they derive essentially all of their value.
| Underlying technology at this stage has almost no value.
|
| In our economy, even an untalented fool speculating on random
| projects can generate a profit if they have capital; this
| fact makes talent worthless and means that capital and
| network effects are EVERYTHING.
| gridlockd wrote:
| I'm not saying there will be yet another Bitcoin fork that
| just gets rid of the block halving "as a feature". That
| would be nonsense.
|
| I'm saying that _the official Bitcoin blockchain_ is going
| to get rid of the block halving, the minority fork will
| keep the limit "as a feature" and will be called "Bitcoin
| Classic" or something.
| paulmd wrote:
| Even better, we could adjust the rate of issue in accordance
| with the demand for money, thus negating the need for more than
| a constant, low amount of inflation in the first place.
|
| We could call the entity that adjusts the rate of issue a
| "central bank" and they could perform this "inflation
| targeting" to keep the value of the currency stable through
| economic shocks.
| irln wrote:
| Even, even better that "central bank" could choose winners
| and losers providing credit to certain participants
| eliminating the need for petty "price discovery" and creating
| a system where 20.5 million people can lose their job on the
| same day something called "the stock market" goes up 400
| points...a pure "stable" utopia!
| trynewideas wrote:
| MarketWatch: https://www.marketwatch.com/story/what-is-the-
| bitcoin-halvin...
|
| What is the halving or halvening?
|
| The event is known as the "halving" or "halvening," and occurs
| every four years, where the rewards for those who support bitcoin
| are slashed, quite literally, in half.
|
| So-called bitcoin miners expend tremendous amounts of computing
| power to verify transactions and link them, digitally into a
| block, hence the term blockchain. Miners on the blockchain -- the
| digital ledger technology that underpins the currency -- receive
| a precise number of bitcoins for their efforts in solving a
| complex puzzle.
|
| That computing effort is at the very heart of the digital
| currency that was created 11 years ago by a person, or persons,
| identifying themselves as Satoshi Nakamoto.
| gowld wrote:
| Why was the decay curve implemented ad catastrophic halving
| instead of 10%/yr or adaptive like the block creation rate?
| zhoujianfu wrote:
| I think Satoshi maybe liked the idea of having these big
| "events".. sort of like the olympics? It also helps give
| everybody a speculative target to try and hold bitcoin until.
| And one that's typically far enough away to seem like it
| might not be priced in but not so far away as to be
| unreasonable to target. Like four years of high school until
| graduation, or four years of college..
| llarsson wrote:
| What does that mean in even plainer English?
|
| Is Bitcoin now half as valuable? Did mining it get
| easier/harder? Less profitable to mine, but existing Bitcoins
| still have same value as before?
| RandomBacon wrote:
| It becomes less profitable to mine, so probably less people
| will mine it. It reduces the potential amount of BTC that
| miners have to sell to recover their costs. The idea is that
| less selling will increase price.
| vmception wrote:
| Its like when Saudi Arabia and all OPEC nations cut their oil
| output in half, without all the drama.
|
| easy to understand right?
| tootie wrote:
| Oil value is based on supply and demand. Bitcoin value is
| purely arbitrary.
| vmception wrote:
| a halving has nothing to do with its value. demand stays
| the same, supply cut in half. analogy fits no matter
| which asset class you happen to respect more
| tootie wrote:
| I suppose it's more apt to say that demand is arbitrary.
| Demand is currently based on perceived demand.
| lkbm wrote:
| Supply growth cut in half. Unlike oil, BTC doesn't get
| used up.
| vmception wrote:
| Yes, supply _growth_. A semantical distinction not used
| in any other asset class so why here? Maybe it does
| better help someone understand, here 's to hoping.
|
| But in any case, BTC does get burned in a variety of ways
| - immovable unable to be spent - in predictable ways
| based on the poor but improving user experiences. When it
| isn't burned, people look at the days destroyed metric to
| understand the actual supply.
| maxerickson wrote:
| The 'ore' has half as much in it.
|
| It makes mining less rewarding. It's not 1/2 because miners
| also get transaction fees.
| colechristensen wrote:
| "Mining" is a brute force search for a solution to a
| cryptographic math problem. The difficulty of that math
| problem is adjusted so a solution is found about once every
| ten minutes.
|
| Whomever solves it get's a reward + whatever transaction fees
| happened since the last solution. That reward was initially
| 50 BTC, it has halved 4 times now, 50,25,12.5, now 6.25.
|
| Something like a lottery that gets drawn every ten minutes,
| but instead of somebody rewarding you, you just have to show
| the network that you found the solution.
|
| After the halving, the reward per round is... well cut in
| half.
|
| This affects mining profitability. Puts lots of hardware in
| locations at negative profitability so they'll have to shut
| down and buy new hardware, find cheaper electricity, etc.
|
| Whatever happens, difficulty will be adjusted so the same
| 10ish minute block reward time is maintained.
|
| What does this do to value? Eh, the bitcoin market isn't very
| rational or consistent. Miners will have less to sell,
| certainly, but people will have all sorts of ideas of what it
| will do to the price of bitcoin and since so much of bitcoin
| is speculation and so little is using it for any real
| transactional purpose, who knows?
| Phelinofist wrote:
| What triggers this halving? Given the distributed nature of
| bitcoin it probably wasn't some central entity, wasn't it?
| RonanTheGrey wrote:
| It's built into the protocol. After X number of blocks
| mined, the reward paid for a mined block halves. This
| repeats every 4 years until all blocks are mined (about
| 100 years from now).
| colechristensen wrote:
| Block count. Every 210,000 blocks
| kinghajj wrote:
| The Bitcoin code is set to halve block rewards every
| 210,000 blocks. If a miner attempts to mine a block with
| a too-high reward, the network nodes will reject it as
| invalid.
| [deleted]
| economicslol wrote:
| Completing the mining of 1 block of bitcoin now rewards half
| as many bitcoins as it used to. Bitcoin hyper-bulls think
| this is a massive event and believe it will lead to Bitcoin
| rocketing to $300K-$500k by next year. Bitcoin increased in
| value by hundreds to thousands of percent after the last 2
| halvings but whether this is a cause and effect relation is
| not clear. Both were during the Bitcoin Hype train.
| searchableguy wrote:
| mining it will result in half the reward.
| llarsson wrote:
| But existing Bitcoin still have the same value?
|
| Does this mean the end of businesses that seemed to exist
| only to mine using custom computers and GPUs? Because their
| revenue stream has been cut in half?
| SAI_Peregrinus wrote:
| The block reward has been cut in half. So if they were
| mining for 0 transaction fees then their revenue would be
| cut in half, but nobody does that. The actual change will
| thus be less than half, and it's possible transaction
| fees will increase.
| ur-whale wrote:
| The event will not exactly come as a surprise for the
| miners: the date was more or less built-in the bitcoin
| algorithm from day one.
|
| If it means the end of their business, it means their
| planning was fairly poor.
| ta17711771 wrote:
| Mining and immediately selling right now will get half the
| reward.
| cyral wrote:
| You get half the amount of BTC as before, regardless of
| the market price
| yreg wrote:
| More than half, since you still get the full transaction
| fees.
| justinmeiners wrote:
| miners get paid less for the same work
| kinghajj wrote:
| The last statement, yes. Miners receive less new Bitcoin for
| each block, which, of course, assuming the price stays the
| same, means that their mining becomes less profitable. The
| price itself isn't directly tied to the block reward, though
| the market has recently been more volatile in anticipation of
| the halving.
| femto113 wrote:
| It's a little more nuanced than just getting paid half as
| much to mine. Miners earn income form two sources, a per-
| block "subsidy" (source of the mining analogy, this is
| simply materialized and given to the miner), and per-
| transaction "fee" for each transaction included in a blocks
| (these fees are paid by the transaction initiator). Only
| the subsidy is getting halved. I think the long term vision
| was the fees would be the main source of income, but
| they've never made it past around 30%, and are currently
| only about 5-10% of the total reward.
| gowld wrote:
| Does this suggest that transaction demand severely lags
| the inventor's assumptions when building the coin
| parameters?
| sp332 wrote:
| I don't think so, after all there was a soft-fork
| (SegWit) and a few hard-forks (Bitcoin Classic most
| famously) just to address the high volume of
| transactions. I think the creator did not anticipate
| bitcoins becoming so valuable. The high value means that
| people are only willing to pay small fractions of the
| block reward as fees, because that's worth a lot of
| money.
| zaksoup wrote:
| The payout for mining bitcoins was cut in half. The number of
| total available bitcoins in the system remained stable.
| pfortuny wrote:
| No: it is the value of mining, nothing to do with the value
| of the token. AFAIK.
| [deleted]
| DC-3 wrote:
| In relatively plain language, this means that new bitcoins
| are being created at roughly half the rate as before.
|
| > Is Bitcoin now half as valuable?
|
| Bitcoin's value, like any currency, is dictated by the
| market.
|
| > Did mining it get easier/harder?
|
| The difficulty hasn't changed (although it might if this
| causes a significant drop in the number of miners).
|
| > Less profitable to mine, but existing Bitcoins still have
| same value as before?
|
| It is less profitable to mine bitcoin. The impact this will
| have on the value of Bitcoin remains to be seen.
| chx wrote:
| > Bitcoin's value, like any currency, is dictated by the
| market.
|
| Yeah, no. It's not a currency.
|
| https://medium.com/s/the-crypto-collection/play-bitcoin-
| reme...
|
| > Bitcoin lies in the same economic category as financial
| games like poker, roulette, and the lottery. These are all
| zero-sum games. The property binding all zero-sum games
| together is that the amount of resources contributed to the
| pot is precisely equal to the amount that is paid out.
| Because nothing additional is created in a zero-sum game,
| for every player who wins something from the pot, there
| must be a loser.
| wpietri wrote:
| I'm not sure why this is getting downvoted. Even
| prominent Bitcoin promoter Fred Wilson admitted that
| Bitcoin wasn't viable as a currency:
| https://avc.com/2017/08/store-of-value-vs-payment-system/
|
| A couple years back, an NYT writer tried living on
| Bitcoin: https://www.nytimes.com/2018/04/16/nyregion/new-
| york-today-l...
|
| It didn't work. It doesn't function as a currency.
| Whatever the intention, it's a speculative, high-
| volatility commodity with no use value traded in an
| unregulated market.
| SilasX wrote:
| I'm not sure why you're confused about it being
| downvoted.
|
| 1) Whether or not it meets the (or someone's preferred)
| definition of currency is wholly incidental to the
| answerer's explanation, so even if correct, this is not
| the place to make the point.
|
| 2) Bizarre non-sequitur that equates finiteness of
| currency with zero sum utility which is a real stretch
| and easy to find counterexamples for (eg chore tokens).
|
| For the cherry on top, it links Medium as a main source.
|
| Is that a good enough justification to downvote?
| three_seagrass wrote:
| This is splitting hairs.
|
| Sure, everything _can_ be used as a currency. Gold,
| bitcoins, fiat cash, snackpack puddings at lunch,
| seashells, etc.
|
| Then there are qualities that make something a _good_
| currency, by modern standards. As others have pointed out
| with links to examples, being deflationary, irreversible,
| volatile, and having low coverage with unpredictable fees
| are traits that make Bitcoin not a very good currency.
| Yes you can hand wave about future promises to be a great
| currency or chore tokens, but that does not reflect the
| utility of Bitcoin right now as a good currency.
| jameslevy wrote:
| Would you say the same thing about gold? Genuinely
| curious, since obviously Bitcoin is frequently compared
| to gold as a store of value instead of a unit of
| exchange.
|
| The most persuasive defense of Bitcoin as a store of
| value is that the world needs precisely one digital store
| of value, and game theory may dictate that it will end up
| being Bitcoin.
|
| But yes, Bitcoin is obviously ridiculously volatile. I
| tell friends that there is money to be made, but you need
| to have a very strong stomach for it.
| CryptoBanker wrote:
| Any market that is just a market is a zero sum game....
| One cannot create value from trading.
| avmich wrote:
| > One cannot create value from trading.
|
| I think you're wrong.
|
| An illustration could be McDonald's offering of a burger
| for $1, where you'd prefer burger and McDonald's would
| prefer $1. If you give them $1 and McDonald's give you
| the burger, both of you would be better off.
| arcticbull wrote:
| > Bitcoin's value, like any currency, is dictated by the
| market.
|
| ... is dictated by the whims of Bitfinex and Tether
| mywittyname wrote:
| The markets for a lot of esoteric commodities are
| dictated by the whims of a select few organizations. It's
| partially how so many of these end up being control by
| cartels, the demand for cranberries or topaz is just no
| where near that of soy beans and oil, making it
| relatively easy to corner the market.
| three_seagrass wrote:
| True, and there are also commodity markets that are not
| controlled by an oligopsony, which truly are controlled
| by the market.
|
| It's an important distinction to make, because the
| statment "Oil's value is controlled by the market" isn't
| very true.
| gjs278 wrote:
| huuurrr mom I said it again!!! it's not dictated by
| tether. at this point it's dictated by people throwing
| money into GBTC and forcing them to buy coins to cover
| the holdings. you are a know nothing. turn off your
| computer and stop wasting electricity.
| standardUser wrote:
| This is an ignorant question, but maybe someone can finally
| explain this to me...
|
| "So-called bitcoin miners expend tremendous amounts of
| computing power to verify transactions and link them"
|
| If this is true, shouldn't the ability to mine be limited by
| the computational resources needed to perform these tasks?
| Instead, it seems people increase computing power with no
| apparent limit in order to mine, and the "demand" for that
| power is never met.
| albntomat0 wrote:
| The difficulty of the task adjusts periodically, based on the
| amount of computation provided by all miners.
|
| What matters to an individual is their percentage of the
| overall mining power, not their computing power in absolute
| terms.
| AgentME wrote:
| All the work in Bitcoin mining is going toward making it
| harder for someone to rewrite the history of Bitcoin
| transactions (which would allow them to take back sent
| Bitcoin). More miners means it's harder for any attacker to
| rewrite the transaction history. The protocol incentivizes
| people to mine (and simultaneously solves the problem of
| deciding who to distribute newly-minted Bitcoin to) by
| distributing the fixed amount of newly-minted Bitcoins
| between the miners every ten minutes.
|
| Bitcoin's security relies on the true blockchain having more
| Proof of Work in it than any attacker could create. A Proof
| of Work value is a proof that you had a computer spend about
| a certain amount of processing time tied to a specific input
| value. Someone with one computer can't produce Proof of Works
| as fast as someone with multiple comparable computers.
| Someone trying to take-back a Bitcoin transaction and create
| an alternate blockchain with their transaction removed can't
| create Proof of Works as fast all of the world's Bitcoin
| miners working together (unless they have a secret god-tier
| supercomputer, or somehow convinced most of the world's
| existing Bitcoin miners to work for them instead).
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