The problem with that is that it's a one-way peg. Energy has been converted into Bitcoin, but bitcoin can't be converted back into energy. Therefore people with bitcoin holdings cannot sell the energy back on the open market if this bitcoin thing doesn't work out.
So, yeah, it's based on energy consumed. But energy once it has been consumed (and can't be consumed again) has no market value.
That's an old prostitutes adage. It applies to anything. What's your point? 2-way pegs have counterparty risk and are subject to fraud. Pick your poison, work or trust. |
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Plonk!
You have the patience of Job. The trick is to remember that I'm not actually writing a response to the OP. I'm writing a response to all the truly curious people that actually want to understand how it all works and will stumble across this thread from a Google search. My patience, and carefully written responses are for them. The OP's poorly thought out questions and silly assumptions are simply a launching-off point for me to have fun writing detailed descriptions about a technology that I find fascinating and entertaining. A gentleman and a scholar. Yeah, I guess that's why I'm still here too, although I still enjoy the mud fights sometimes. |
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You have the incentives wrong. Your mistake is starting with the premise that miners control the network. They don't. The economic majority controls the network. If the economic majority doesn't agree with a change, it won't happen (or last for long).
Let's imagine a scenario where a large percentage of the global hash rate wants to implement a change which a large percentage of the economic interests do not want.
This group of miners forks Bitcoin. Everyone who has bitcoins at this point now have coins on two chains. They don't want the new forked coins, so they immediately start selling them. The price of the coins on the fork starts to plummet (a majority is selling). If those sellers happen to find buyers for their forked coins, they will now have additional funds which they might use to purchase actual bitcoins. There will be massive (we are assuming an economic majority here) downward pressure on the price of the forked coins, and possible upward pressure on the price of actual bitcoins.
You are a miner. You have costs. You may even be in debt for hardware. Are you going to mine the forked coins which are rapidly decreasing in value or bitcoins which are at worst holding at the same value and possibly even increasing in value?
This scenario can of course go the opposite way, if the economic majority wants the change, they will liquidate their actual bitcoins and possibly use the proceeds to purchase additional newly forked coins.
The point is, the miners are at the whim of those who value the coin. If they try to force changes on the economic majority, they will quickly find themselves mining worthless coins. Prohibition can not stop economic forces (typically quite the opposite). If mining is outlawed, then outlaws will mine. If a coin is valued, people will find a way to mine it, regardless of any legal hurdles.
If you're a large mining farm, you're going to mine whatever fork the regulations dictate, if regulations force you to go bankrupt, well, then you will go bankrupt. That's the nature of large businesses, they are easily targeted and regulated. You are saying that regulators are going to force a particular fork to be legal and others to be illegal based purely on what? If that happened and I were a miner, I would sell my equipment and get out of mining before it happens again. Bitcoin is just too small now, so they don't bother, the whole market cap of Bitcoin is pocket change to them at this point, it's politically not worth raising hell about. The economic majority may as well support the new regulated fork, and the network will keep humming along. But will this new fork be any different from fiat?
This can be done with anything in a dictatorship. They could make your blood type currency. You should be careful what you wish for. |
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Market analysis:  |
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A commodity money is worth what it costs to make. A $20 gold piece has $20 worth of gold in it, less fees. As Bitcoin expansion decreases volatility (as it already has) it will become the value of the cost to make it, less fees. Mining for money has a tradition that goes back thousands of years.
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Maybe cause it's a bubble?  An "asset" with no intrinsic value??? Best to sell now before it gets to zero. What did it for me was, as a US citizen, having to report all conversions of BTC to the IRS. BTC -> USD, BTC -> gold, BTC -> dinner .. all require IRS disclosure. Basically, it makes Bitcoin irrelevant as a "currency" if you plan on following the rules. Well played, IRS, well played. I dont think so. You are required to pay capital gains tax at the end of the year. Who said you need to report all conversions? This. Also, you are assuming that you'll have any BTC-related income to report. I think, for most people this year, the IRS provisions are a Godsend because they can now claim losses. How do you claim losses if you don't sell your bitcoins for less than you paid for them? If you want to take losses in bitcoin this year, there is one interesting strategy that I have seen described on stock boards. 1. You buy whatever the number of bitcoins you want to keep on or before November 30 (Nov 29, 28). 2. You sell previously bought bitcoins (those that you bought before those that you buy in #1) on December 31. 3. You claim loss in BTC trade against your other capital gains for the year until ALL such gains are gone+$3000 4. You should not buy any new bitcoin until after Jan 31 so you don't have wash sales. Result: you will have newly bought bitcoins, but you reduce your tax on other capital gains if you had them (plus $3000) Lose money just so you can claim to lose money. If everyone did that it would be musical chairs and you would be left without a chair. No, the point is to get rid of extra capital gains in other assets WHILE maintaining the same number of bitcoin as you want. Basically, you are replacing bitcoins bought during the year with bitcoins that you are buying in Nov28-Nov 30 timeframe. I mean volatility. My point is that if everyone sells, then the price drops and you get more loss. If everyone buys, you get less coins. Both ways you lose and the tax credit is trivial. |
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Plonk!
You have the patience of Job. |
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I want to party with you, cowboy.
Been partying since the beginning of time  Obviously. |
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How I learned to quit worrying and love the dump.
You love a dump that's been going on for 12 months straight? Will you love it still if it continues for 12 months more? At what point is a continuous, unrelenting downturn seen as a serious problem for Bitcoin? Price isn't a big concern. I held well over a year at a loss in 2011-12. This is no different. Fortune favors the bold. |
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Google: Bitcoin is dead
returns About 853,000 results (0.63 seconds)
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How I learned to quit worrying and love the dump.
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Maybe cause it's a bubble? An "asset" with no intrinsic value??? Best to sell now before it gets to zero. What did it for me was, as a US citizen, having to report all conversions of BTC to the IRS. BTC -> USD, BTC -> gold, BTC -> dinner .. all require IRS disclosure. Basically, it makes Bitcoin irrelevant as a "currency" if you plan on following the rules. Well played, IRS, well played. I dont think so. You are required to pay capital gains tax at the end of the year. Who said you need to report all conversions? This. Also, you are assuming that you'll have any BTC-related income to report. I think, for most people this year, the IRS provisions are a Godsend because they can now claim losses. How do you claim losses if you don't sell your bitcoins for less than you paid for them? If you want to take losses in bitcoin this year, there is one interesting strategy that I have seen described on stock boards. 1. You buy whatever the number of bitcoins you want to keep on or before November 30 (Nov 29, 28). 2. You sell previously bought bitcoins (those that you bought before those that you buy in #1) on December 31. 3. You claim loss in BTC trade against your other capital gains for the year until ALL such gains are gone+$3000 4. You should not buy any new bitcoin until after Jan 31 so you don't have wash sales. Result: you will have newly bought bitcoins, but you reduce your tax on other capital gains if you had them (plus $3000) Lose money just so you can claim to lose money. If everyone did that it would be musical chairs and you would be left without a chair. |
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OR they could reorganize as a non profit.
A business venture that fails is a non-profit. They have zero chance of changing Bitcoin into a decentralized trading platform for speculative tokens even if regulators allow them a double standard against Bitcoin because competition. If they can do it, then a bigger fish will eat their lunch. One after the other they try and they fail to knock Bitcoin off the hill. Hopefull they will at least allow some devs to learn enough to defect and become Bitcoin core devs. Groupthink isn't for everybody. Blockstream does indeed seem to have some pretty cultish notions. |
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IMO, I think that was largely due to speculation in "paper gold" and electronic gold instruments, that it became apparent may not have been 100% backed, thus fractional reserve.
How do they not back them 100%? Don't they have a 100% foolproof process that is impossible to counterfeit but fast and easy to verify? |
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One can be an investor and a miner and play many games on multiple levels, that's exciting!
What games can a miner play? Well, there are at least two types of miners, those who are in position to develop hardware and those who buy it from the first ones. Choosing to be a developer or user. Sounds like a fun game. The first-tier miners play their intellect games in designing ASICs targeting various process technology from yield/cost/power perspective. They also need to decide wether to sell or to mine themselves, not all of them are honest, so there is an element of luck in the game.
The second-tier miners play their profit games and make decisions at which pool to mine if they agree or disagree with pool's behavior.
There are so many theme parties where developers come dressed as differing yield/cost/power technologies. The ladies love that. And there are always those, who haven't touched mining yet and are looking for a perfect position for entry either with their piles of fiat or some alien advanced tech, that they need to ramp up volume production of. There is plenty of fun in the mining land. Those who are willing to compete can always do that, and there is a zoo for everybody else I want to party with you, cowboy. |
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The gold price has dropped by 39% since reaching an all-time high of $1 917.90 per ounce in August 2011. I guess it can't drop much more in a regulated market. |
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2014 was a great year for Bitcoin. So much progress was made in acceptance and the political arena. Bitcoin is no longer ignored. 2015 will be even more exciting. Once more unto the breach, dear friends!
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The question is about life savings. This answer isn't about life savings. The best investment as life savings protection for the future in the U.S. is, fertile land with water, where the patent has been "updated" to show you as the owner. Other than that, gold, silver, copper and Bitcoin. Even though there is inflation, keep a chunk of cash around, hidden of course, in one's, five's, and ten's - maybe include some twenty's - because when the crash comes, you will be able to transact life if you have cash. Bitcoin may collapse due to the delicacy of the power grid and Internet, and it will take people awhile to get used to trading in gold and silver again. For a time, cash dollars will be king when the crash comes. When the crash does come, the dollars should be exchanged for food (something which preferably doesn't perish easily). Food will be the first commodity that shoots up in price. Bullets. |
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What games can a miner play?
Well there's the game of "Guess the shipping date" that's always a party favorite. Classic. Then there's good old "pump and dump the shitcoin" on Bitcointalk. |
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Some of us have life outside the forums...
Of course, but from time to time we all come back here... Except that DannyHamilton was online today... Getting trolled by D&T. j/k  |
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