Bitcoin Forum

The vast majority of the population never has any hope of mining BTC's.  They don't have the tech skills or the tech savvy.  And soon, most GPU miners will give up.  Currently, transaction fees are minimal.  So BTC generation is going to reside primarily in the hands of the wealthy 1% for a long while in the near future.  Fractional BTC generation won't be profitable unless the value of BTC rises significantly.  But with so few people generating the new BTCs, what's going to keep the rest of the population in the BTC game?  What's going to bring new BTC adopters into the game?  And once transaction fees replace mining, those will also be primarily accrued by those wealthy few who can run ASICs.  I'm having trouble seeing what's supposed to keep most folks in the BTC game for the long haul.

http://www.paypalsucks.com

^^ This is.

Specifically, we're moving towards a future where everything is "in the cloud". Supported by microtransactions. Also, increasing numbers of freelancers looking for work who want to be paid.

Couple that with a tech-savvy group of people with BTCs in their wallets rather than $, because they provably hold more value over the long run.

I see.  So the idea is that folks will pay USD to purchase BitCoins to avoid Paypal problems?  Only the tiniest handful of the population will ever do that.  The amount of tech savvy you have to have in order to use BitCoins would have to drop by about three thousand orders of magnitude before more than .1% of the US population would consider avoiding potential Paypal issues by converting USD into BitCoins.  But maybe you're expecting that to happen?

No, not at all.

Folks -- particularly the tech-savvy -- will put their residual income into BTC because it will hold its value better.

The target market of online companies intersects neatly with these potential customers with a surplus of Bitcoins.

Once they can actually pay for more things with BTC, they will start to transfer more in -- their residual + some of the money they would spend on services.

Clearly, the market is very far from being tapped in this respect.


Personally speaking, as someone who does a bit of freelancing, I've started to offer BTC payment as an option. I'd rather get a BTC in my wallet than some USD or foreign currency in my PayPal. I'm sure more people will feel the same.

Fear of PayPal freezing my sellers account > fear of long-term value decline of BTC.

It's a win-win situation for both service providers and customers.

Open source, it's the wave of the future, especially if anyone can make any currency they like ;) I wouldn't have taken an interest in Bitcoin if they hadn't released the source code for everyone to tinker with.

Early adopters will do well, no doubt, and have already done, but that's true for any new technology.  The guys that get in first make a motza.

But most people will want them for their utility.  That's what it's all about in the end.  Governments force us to to transact in their currencies by making them legal tender and blocking other currencies including those based on Gold.  That makes them high utility for many of us, (critically by force not choice) but as more and more trade migrates to the internet and becomes more global in nature it benefits having a truly global currency.  No country can provide this and, thank god, world government won't happen so it is going to take a market solution.  Hence, Bitcoin.

Whether it will replace government currencies I don't know, but it will take more and more market share from them as time goes on.  They sure don't help their case by debasing their currencies every chance they get either.   

It's just a great solution.  Better than Gold because it is more predictable.  Who knows where they will be able to get gold from as technology improves and we achieve true energy abundance.   But Bitcoin is a known quantity.  The best qualities of cash and gold without the drawbacks of either, plus improvements that neither have.

Your substitution would hold up if we didn't need a lot of folks mining.  You don't need a lot of people mining gold in order for gold to have value.  But we do need a lot of people "mining" BTC in order for BTC to have value.  If the blockchain doesn't get built, BTC has no value.  So what's going to happen when their are only a few people building the blockchain?  If only a few people are generating BTCs isn't that a problem?

You might respond, "If only a few people are mining gold, that's not a problem, because gold will still have value."  But that response doesn't work.  Gold will continue to have value whether or not anybody mines it.  (Why?  Who cares.)  BTCs will have NO value unless the blockchain is stably built.  The value of BTC requires their being a lot of "mining" (I use "mining" as shorthand for "helping build the blockchain").  When the vast majority of miners get cut out of business, what's going to happen to BTC?

Interesting question.

I have faith in the free market... just offer goods and services to tempt bitcoins away from those millionaires!

Ridiculously high potential upside.  That's why I'm here.

Only while Bitcoin doesn't have much utility for most of the population.  Which it doesn't at the moment because the infrastructure and businesses that surround it are still building up.  Let's face it, it's mostly not usable or accessible for the average person who just wants to buy stuff.  It's at least in large part populated by speculators at the moment.

That's why I'm in it for the long haul, because I can see the possibility of it catching on.  If it was only about mining, then I'd at least have sold part of my holding by now.

My point stands, the vast majority of people were never involved in mining gold when we were on the gold standard and nor will the vast majority of bitcoin users ever be involved in mining.  I myself have never been involved in mining and probably never will be, I bought mine on the market, just as most people will.

Why will there only be a few people mining at some point?  My understanding is that there will be transaction fees beyond mining anyway. 

with me, it's get in, win/lose 50%, get out. if not, 1 year.
long haul? with the way the world changes these days, 3 weeks is the "long haul"...

I believe in a better tomorrow.

I never think that bitcoin will replace fiat currency, it is just another payment method and fits much better for part of people's interest, pirate party even get a seat in EU parliament, the society is taking a change slowly, the borderless virtual economy will outgrow real economy sooner or later

Thinking about future, in a very realistic virtual reality, virtual car sell could possibly pass the sell of the real car, since it has so much configurable options and many of its functionalities are impossible to implement in a real car. So far everything in virtual world is not scarce and can be easily duplicated, that aboundant supply prevented economy shift from physical goods production to virtual goods production, bitcoin is just a great example that if you limited the supply for virtual things, the value can surpass its physical counterpart

My view is that Bitcoin serves a particular purpose very well: A means to exchange value across the internet for goods/services which was made precisely for the internet.

Fiat currency serves it's purpose extremely well: It enables governments to offer it's citizen's the ability to exchange value for goods/services in a tightly controlled manor (which isn't a bad or good thing in my opinion).

I like having options.

What keeps me here is a few reasons.

1. The part of the UK I live in has the worst job rate in the country.
2. I have been fixing computers since I was a child so bitcoin mining really helps put all those hours spent fixing computers into currency.
3. My bank/fiances are not the greatest but it is what I'm stuck with.
4. The greatest of them I mine the coins I keep the coins no one can ever touch or move them besides me :D

So the wealthiest 1% are currently the only ones mining?

How astute.

Your choice at this very moment to not take a risk on Bitcoin is exactly why you will never be in the top 1%.

The Mark Zukerberg of today is on the forum right now figuring out the next big thing for Bitcoin. And s/he is probably living off of raman and bitcoin purchased pizza.

I'm in bitcoin for a simple reason

I think it was cbeast here, who said:  "It's a really, really good idea."

I like those.

+1

It was me, though cbeast may have said it too.

Bitcoin is three things rolled into one:

1) a currency
2) a payment processor
3) a store of value

If it achieves 1% of its potential as any one of those three, I'll be a happy person and the world will be a better place. That's why I'm in it for the long haul.

This reads to me like "No one will live indoors because plumbing is so hard."

Ahh.  My apologies then.  Best reason ever, encapsulated in a perfect sentence.

$$$$ in my eyes...

that and hoping for a nice convenient way to easily spend monies online while saying "Screw you" to the banks.

You're the romantic type, aren't you?

The only people who are living off Bitcoin purchased pizza are the early adopters who have already accrued BTC before it exploded.  Nobody else is living off BTC purchased pizza (if they are, it's because they exchanged USD for BTC, and then exchanged BTC back to USD in order to purchase pizza).  Nor is anybody trying to purchase an ASIC living off BTC purchased pizza.  And nobody who wants to get into mining now is living off BTC purchased pizza.  99% of people who are getting into BTC mining are currently doing so because it's a hobby, they're bad at math, they're very, very optimistic, or they want to contribute to something good in the world.

When ASICs come out, and they will at some point, building the blockchain and reaping the profit for having done so will be transferred almost entirely into the hands of the fiat rich.  Thus anyone who wants to use BTC will have to purchase it with fiat (or some other cryptocurrency).  I can't see how this looks good for BTC in the long run.

As for the early adopters who are rolling in BTC's?  See this paper:

http://eprint.iacr.org/2012/584.pdf

I have been a part of the struggle for many years. I have fought for worker rights even when it was dangerous. I have remained true to myself even when those around me did not share my vision. I have kept my integrity in spite of the temptations to become part of this corrupt system. I have followed many paths that were going in the right direction, but ended up going nowhere. Now I realize they were leading me to a path that has been paved by people with not only a passion for justice, but the skills to do something about it. Bitcoin is the Manhattan Project to end the war against the gobalist banksters once and for all. I may not be a rocket scientist bitcoin developer, but I can help anywhere I am needed.

your not seeing the entire picture.

There is a roughly the same amount of BTC mined each day. as long as it has value people will mine it. if the value is sufficiently high where someone can get the equipment to mine with and make a profit then people will do so. if the profit drops then a percent of people quit mining untill its profitable enough to sustain a profit for the remainder of those involved. also keep in mind the difficulty changes based on the network hash rate, so as people join and leave it will adjust accordingly.
 if you dont get what im saying then try to spend some time thinking about it, those that mine understand this.

As far as what i see in bitcoin, i see the possibility of a future. one where i would be stupid to have not gotten involved with bitcoin. i dont plan to be those people that say "i wish i had bought stock in Microsoft, Google, Amazon etc".

No, you aren't.  Also, it's "you're", not "your".


99% of folks are about to be cut out of mining BTC at current prices.  There will soon be NO value in mining BTC unless (i) you run an ASIC farm, or (ii) you speculate that the value of BTC will skyrocket (like, through the fracking roof).


Ok. So hope.  Great.  You hope Bitcoin turns out like Microsoft.  Fantastic.  But your hope is not a good reason to think that this will come to fruition.

When everybody but 1% of the population (that is fiat rich) is cut out of getting any profit from building the blockchain, what's going to happen to BTC?  You can hope that this will work out well for BTC.  But do you have any good reason to so hope?

What's going to happen to bitcoin is that it will be used for what it was intended to be used for.

To transfer and keep money safe from the banks and the governments.  To promote freedom, and options.  To reduce dependence.  To make some part of the world better than it was.

Bitcoin was never a get-rich-quick scheme:  it's an incentive.  Some will get rich - but they're the people who are working to make bitcoin work and to get it adopted - and they should get rich.  It's hard work.  Do you think all the people who adopted early have been sitting on their asses waiting for people like you to make them rich?

Where do you get the idea that bitcoin is about getting rich?

I'm not going to invest in something unless I think I'll probably make money by so investing.  Are you the kind of sucker who will invest in something even if you know you will lose money by doing so?  We need more suckers like you.

No.  I'm the kind of sucker who will invest in something that is provably good.  But I suspect we mean different things by the word "invest".

Money isn't everything.  I mined from Q1 2011 through August of last year, but - not being a coder, or able to contribute in that way - I've spent quite a bit of it here and there along the way.

We agree though... or at least I think we do.  More suckers like me are needed.

This made me smile.  It appears to describe a good few of those who have ASIC pre-orders.

There appear to me to be a number of flawed assumptions in Heathrow's argument.

Anyone else slightly suspicious of the numbers of someone too keen to see everything in terms of 99% v. 1%? ;)

The first '99%' to address is '99% of folks'.  Are we talking 99% of people who mine now?  I am given to understand (though I don't have links to hand) that the vast majority of 'hobbyist' miners mine such small numbers as to make little difference to the mining distribution in terms of securing the Bitcoin from attack and the amount they make is probably peanuts by now also.  So to whom is it a tragedy that they will have a choice to upgrade to a BFL 'jalapeno' or equivalent or stop mining?

I think we will all be in agreement assuming ASIC mining is the soon-to-be future, there will be no value in mining BTC by any other means but how one gets from that to the assumption one needs an 'ASIC farm' to make money I don't know?

I'm failing to see where this 'fiat rich reaping the profit' claim is based on.  Is it because some of the ASIC machines are priced in tens of thousands whilst video cards are priced in hundreds?  Buying a large number of GPU cards (which incidentally in contrast to ASICS would have commanded a substantial purchase discount) also costs tens of thousands.  I don't see how ASIC changes that picture in the way implied.

With prices per hashing capacity virtually the same for the hobbyist (e.g. BFL Jalapeno buyer) and 'farmer' spending tens of thousands there are virtually no economies of scale to speak of which would drive the hobbyist out.  It will take the same duration for the hobbyist and the farmer receiving their kit at the same time to recover their investment (other than for some variation in running costs).

The next percentage referred to is '1% of population'.  It's unclear to me whether this refers to the currently mining population, to bitcoin user population or world population.  Let's hazard a guess at Bitcoin user population?

There is evidence of wider adoption of Bitcoin by some orders of magnitude from say a couple of years ago when maybe 70% of Bitcoiners were mining as against say 20% today.  But 70% of 1000 is 700 whilst 20% of 10,000 is 2000.  Which of the two makes for a stronger network - and that's without even considering the increase in difficulty thereby the decrease in likelihood of successful attack?  All those figures are probably way off but the principle stands.  Other than for securing the network why does the percentage matter if the primary purpose of Bitcoin is not to make money for miners but to serve the needs of its users?

This ^

I would be intrigued to hear an argument as to how it is expected that ASIC (or any) mining will be anything other than marginally profitable in the long term, especially seeing as you don't need to be a geek anymore, rather just to buy something to plug into your PC and let it run.

Give me something substantive and I'm ready to listen and to change my mind accordingly - otherwise it just sounds like a rant.

As for what keeps me in Bitcoin for the Long Haul - it's simply because it is awesome.  The decentralised thing, the privacy thing, the known-from-day-one inflation thing, the virtually infinate divisibility thing, the ability to transfer irrespective of distance or boundaries thing etc. etc.  What's not to like?!

Sitting on the sidelines frowning about all of these rich people buying ASICs so that they could get more rich is talk of someone who will never be rich.

If you want some Bitcoin purchased pizza just go to http://pizzaforcoins.com/ If I were in the states I would only order through them when buying pizza.

C++

I just like using it much better than crappy paypal or the like.

That does sound like something I might say. Some folks observe that I have an astute perception for the obvious.

Curiosity  :)

. Pissing off governments

. Value

. Ease of use

. No stupid forms to fill out every time I want to do something with my money

. I can actually freely earn money with Bitcoin because of so many obstacles being taken away

This is a good point.  I might even be willing to purchase a Jalapeno just to "help" Bitcoin, and I suspect there are quite a few people who feel the same.  Enough?  I don't know. 

I certainly wouldn't expect a return on my investment, however.  At current difficulty, one could respect a return on a Jalapeno in several months.  Unfortunately, those Jalapenos will come out at the same time as all the other ASICs, and the current difficulty will skyrocket, pushing back a recovery on one's investment to a year or more on the assumption that BTC prices remain the same.

So you really do have to be seriously bullish on the price of BTC or be willing to be in this for the long haul in order to not just flush money away.  It's not clear to me that enough folks will be wiling to do this.


I was referring to a much larger population than the current bitcoin user population.  Something like the population of potential BTC adopters.


So you expect folks to mine, even at no profit, just to help the Bitcoin network?  The question is whether there will be enough such people to keep BTC decentralized and secure when the massive ASIC farms start coming online.


This is a truism.  It adds nothing to this discussion.  You have to think about some of those "ifs".


Interesting point.  But note that you also have to be willing to do this for free (unless BTC prices skyrocket).  Your Jalapeno isn't going to pay itself off for a LONG time (again, unless BTC prices skyrocket).

amen, even though for me pissing off goverments is just a side effect

Heathrow,  You appear in your reply to me to have agreed to the essential pieces of the jigsaw but are missing the picture it makes...

If I may assist...




Let me repeat what I wrote:


What this means is if difficulty is so high that you are unable to be making a sustainable ROI from a Jalapeno then it's also too high for the 'ASIC farms' to be making a sustainable ROI from their kit.  OK there will be differences for instance if a 'farm' locates itself in a very low power cost area or where the ASICs are mined by the manufacturer making the cost of their rigs significantly cheaper but if anything the farmers have admin charges to run as a business including premises whereas I suspect you have no need to charge for the space your Jalapeno is taking and for your time ensuring it keeps running!

It certainly does add to the discussion - it is essential to the discussion, in fact it is the next consideration.

You talk of increasing difficulty and increasing prices.  They do affect profitability but the point is they affect profitability approximately equally for you and your Jalapeno as it does the farmer.  Who do you think can keep mining at a loss longer, the business who has business expenses or the hobbyist who just has a slightly higher electicity bill and a slightly warmer house?  Regardless of who switches off first when (whether sooner or later) mining ceases to be profitable, when enough people have switched off it will be marginally profitable for those lremaining - until the price/difficulty situation changes again either making it unprofitable again so more have to switch off or more than marginally profitable in which case more ASICs will come back on line making it marginally profitable again.

The point is scale really doesn't matter. Everyone's in the same boat.  After the ASIC 'gold rush' there will be no big money made (relative to purchase price) regardless of scale.  The ones I'm feeling it for are those, whether spending hundreds or hundreds of thousands, who have borrowed or are banking on making more than they will.

But from the network perspective it is great.

My understanding is that the decentralisation of mining does not need to grow relative to the number of Bitcoin users.  It just has to be distributed enough and to be located in enough jurisdictions not to be vulnerable to being taken over by authorities and to keep the risk of anyone controlling >50% to a minimum.  From what I gather there is a much bigger risk from the pools controlling too high a proportion of mining than the actual miners.  But that's for another discussion.

So if you were referring to something along the lines of 'the population of potential BTC adopters' the proportion that need to be mining to keep the network safe is actually miniscule - probably way less than 1%.  But if a random hobbyist in every hundred Bitcoin users fancies playing a role and mining for the fun of it and it is just as likely to be profitable for him (relative to his investment) as the big boys then I don't see where there's a problem.

My question is why would there not be?

The other assumption you appeared to have was that miners (ASIC farmers) would be fiat-rich and that something about the distribution of Bitcoin that is just going to make already rich people richer at the expense of everyone else.  I hope you can see now that the advent of ASICs isn't going to concentrate bigger profits into smaller number of hands.  There's also the consideration that a smaller and smaller proportion of the money made in Bitcoin will be made by miners.  There's speculators, long-term holders being coaxed into spending by higher spending power, there's payment service providers and all the other Bitcoin-centric businesses. 

This was discussed in another thread quite recently https://bitcointalk.org/index.php?topic=149389.0 but I hope you will be able to conclude from what people have commented in this thread that you need not be overly concerned about a supposed increasing gap between Bitcoin Rich and Bitcoin Poor.

The future's bright :)

Because the math looks poor.  If I were to place an order for a Jalapeno now, by the time it arrived I wouldn't pay it off for a year or longer, and after that, I'd be making next to nothing (at current BTC prices).  The investment looks very poor even if one assumes BTC prices will rise a fair bit.  Frankly, the only reason I can see for buying a Jalapeno now is to help the BTC network (and it's not much help!).  You'd have to gather quite a lot of willing folks who don't care about the math in order to sustain a decentralized network.

Now this isn't as significant a problem for folks who are already on Jalapeno preorder.  They'll stand a better chance of making their investment back more quickly, but they'll very shortly be making almost nothing.  The profit motive here is tenuous.  But maybe you think something other than profit is going to motivate all these people?

To the extent that there is a profit motive for speculators, they'll be motivated to BUY BTC with FIAT, not flush money down the drain buying a Jalapeno.

Try to convince me to buy a Jalapeno.  Why should I do it?  Out of the generosity of my heart?  Because I want to promote a decentralized currency even if it doesn't profit me to do so?  Because that's what a good person would do?

http://dustcoin.com/mining

So far most "rich bitcoin mines" seem to dismiss altcoins as beneath their notice.

Possible volume might have something to do with that: quantities that might look quite attractive to a hobbyist looking for chains to add to his merged-mining portfolio might look like chickenfeed to multi million dollar "mini"-rig farms.

Small miners who aren't really making anything at their bitcoin mining can subsidise it by earning on quite a few other chains alongside, assuming the large firms are not able to squeeze them out by making the bandwidth (etc) cost to the small merged miner of the bitcoin chain alone too large to leave any bandwidth (etc) for processing a multitide of merged chains alongside.

Possibly though as the budget crunch approaches more pools will see the addition of more chains to their merge to be something their users might appreciate...

-MarkM-