Actually, it can be done with a third of network hash power. The reason that considering nation-states is especially important here is that their incentives are external to Bitcoin block rewards. Therefore, rational mining incentive (itself still unproven long term) isn't necessarily a strong enough deterrent to prevent censorship attacks.


Sure. If vast amounts of wealth are transferred from fiat currencies to the Bitcoin economy, could that change the equation? If enough money flows from fiat currencies into Bitcoin/cryptocurrencies, surely governments will fear for their monetary sovereignty. Ideally, these events coincide such that governments actually have considerably less resources to attack the network.


Again, you are only talking about short-term profit. It's strange that people talking about mining as if it's not an investment. Your hardware and electricity costs are an investment. That doesn't necessarily entail immediately dumping to cover principal and overhead.


Yes, of course that's the assumption. If it weren't, then why would you make a long term investment? I already addressed the fact that buying bitcoins directly can be more profitable in the previous two posts....


At "an economic loss?" That's the nature of investing. How is that so different than buying BTC before it immediately dumps 50% in price? Investing involves a principal that can be lost. Mining investments entail USD principal/overhead and USD ROI. It's simply a form of investment in BTC where players like Bitmain currently have a big edge. That edge is disappearing, as discussed earlier.


What makes the cost unreasonable, on a long term basis? You apparently think the uptrend in difficulty will never end. Similarly, then, the uptrend in price will never end () So, why is the cost unreasonable? You point to the difficulty trend but refuse to acknowledge the BTCUSD price trend that corresponds to it.

As pointed out above, the incentives of nation-states to attack Bitcoin go far beyond block rewards. I'm far more concerned about mining pools that are operated or co-opted by nation-states. The network needs to harden against this possibility.


Sure, miners can run their own node. The reason they may not in the future is the same they don't now: hash pooling, orphan rates, optimal mining code, etc. None of that changes what I said.

As pointed out above, subsequent generations of ASICS will reduce the "cheap hardware" edge as optimizations become fewer and further between. Bitmain will not dominate the market forever as they have for the past 3-4 years. Also, the days of government-subsidized mining in China seem to be coming to an end, which seems to be pushing miners to different localities including Canada, Switzerland and others. Indeed, miners need cheap electricity, but for example, all of Hydro Quebec cryptocurrency customers get the same rate across Quebec: $0.0394/kwh (3.94 U.S. cents).

It was one of the final posts that Satoshi ever wrote, two days before he left the forum forever. Here you go:


In any case, I don't think that we should take anything Satoshi said (including his design intentions) as gospel. What matters are Bitcoin's users, collectively. They determine the network's fate. That's partly the message I get from the above quote.

What's your point? Who suggested you couldn't? The point was about hardening Bitcoin's network from attack. You conveniently omitted from the quote the statement about considering future nation-state attacks and censorship.


Yes. And marginal miners who can't cover their overheads shut down. The difficulty will only adjust downwards until an equilibrium is met and the trend reverses. That's the entire point of the difficulty adjustment algorithm. If mining speculation far outpaces price discovery, marginal miners shut down. This isn't a permanent situation.


Re-read what you quoted. Coins I mined years ago have ROI'd many times over. You're only thinking in terms of someone who immediately dumps to cover all overheads. You say you're talking about long term profitability when you're actually referring to short term profitability.


No one said it wasn't more profitable just to buy bitcoins. The theme of this thread is concentration within the mining ecosystem. Hence "consider it as an investment in the currency, since decentralized mining is required to secure Bitcoin from majority-miner attacks." The implication is that a casual mining investment will be less profitable than merely buying bitcoins. But merely holding bitcoins also gives you no say over the network. Only economically important (transacting) nodes and hash power is relevant to consensus change.
 

Again, you are only thinking in terms of never-ending difficulty increase (sort of like a never-ending bull market). If you think mining speculation will always look like the 2013-2018 period, I think you are gravely mistaken. That's not how markets work.

It's predicted that ASIC fabrication will become more competitive in the future, as optimizations become increasingly difficult. That can significantly level the playing field vs. players like Bitmain. For example:


You're also only thinking in terms of the current pool ecosystem, as if it's static. Pool incentives can certainly evolve over time to address the needs of miners. Like the exchange system, all current market participants flood to only a few entities. That may not always be true, especially if the interests of pool miners begin to diverge significantly from those of operators of prominent pools.

That's what annoys me so much about this "unit bias" discussion. The reality is that no one can even spend "bits" due to network fees. Spending a "bit" means spending 500+ bits to get a transaction confirmed (for median transaction size). Smaller units like satoshis or "bits" might make sense once Lightning is widely deployed on the mainnet. But aren't we putting the cart before the horse?

It just seems like some early adopters, salty about the astronomical gains in altcoins, now want in on the action. I've never once heard anybody use the term "bits" outside of this discussion about how to control newbie price perception. I'm with Keonne on this one:


People should just learn to use decimals.....

I think this will be one of the next gimmicks seen in mid/large cap altcoins. They'll fork to dilute the supply, while simultaneously inflating user holdings by the same proportion. The price will fall, say, 1000x based on the dilution. Given the state of the markets and newbie perceptions about unit prices, that alone could provide another 100x gains or better over time. It wouldn't surprise me one bit.

Bitcoin isn't a gimmicky altcoin, so we're not going to do that.

But I have to say, I'm very disappointed in those that promoted and merged BIP 176, especially because it seemed like the motivation for doing so was related to this "price perception" problem. "Bits" is inaccurate, and we already use "satoshis." It's off-putting to see in the GUI.

The details still aren't entirely clear to me. But it seems like, under US tax law, that airdrops would follow the commonly held logic for taxing Bitcoin forks. That would mean they aren't "gifts." Rather, the cost basis (fair market value) counts as ordinary income. Any gains thereafter are capital gains.

So it's possible for many of these airdrop tokens that no taxable income is received when the airdrop occurs. There are no markets and no price discovery when the airdrop occurs. So all gains would be capital gains.

This is different than the OP, though, which considers a weekly airdrop of an established, liquid coin. It seems like each weekly airdrop received is taxable income.


Actually, I believe that receiving gifts is tax-free:


The $14,000 figure is about something else. That's the annual threshold for gifts in 2017. You can give someone $14,000 a year and it won't affect your "lifetime exemption." The law allows individuals to give away up to $5.34 million over their lifetime without having to pay gift taxes. If you pass the limit, you (or your heirs) have to pay up to 40% tax.

As I remember things, the price rose significantly when CBOE futures were launched. By and large, people were expecting a similar event when CME futures launched. Appropriately, CME traders shorted the top and the market dumped. They did it on high volume too (at least when compared to the trading sessions that followed).

I wouldn't read that as betting on a "price collapse," though. It was just the path of maximum pain. Most traders lose money, so the market follows the path of maximum pain. Everyone expected the price to go exponentially higher and many bought near the top. That market exuberance got punished. I think the "smart money" was just shorting the top. And if they're smart, they know they can't suppress Bitcoin's price. It's much smarter to ride the waves.

It's a mixed bag. I'd say that Bitcoin has certainly achieved mainstream awareness. Everyone's heard of it, CNBC and Forbes are shilling it daily, and the banks (GS and JP Morgan) are comparing it to gold.

I don't think its usage is mainstream yet, though. Just look at the transaction numbers. All cryptocurrency networks combined still represents a tiny sliver of global value transfer. And it really isn't ready for mainstream adoption yet, given the state of network congestion and the lack of exponential scaling mechanisms. With Rootstock deployed and the Lightning Network close behind, I'm hoping that the network is ready for that kind of scale in 1-2 years.

I voted "No."

It's still too early to jump to conclusions. I have one contact in Korea who says the headlines are FUD. We'll have to wait and see. Coinone confirmed that the National Tax Service had "visited" the premises, so this does feel a bit like the PBOC "visits" that preceded the Chinese ban on domestic exchanges.

To be fair, I can understand the magnitude of concern here. The ridiculous price premiums on Korean exchanges sometimes make me wonder what's going to happen to all these people pouring money into cryptocurrency (and especially altcoins) and shifting all their attention to speculation. South Korea is the same place where peoples' children have died from neglect/starvation because their parents got too involved in gaming....

There are different risk models to consider here. DASH and ZCASH transactions have been successfully traced. Verge is a joke; it's Wraith update is literally 4-year-old stealth address technology. Stay away from it.

Monero is the only privacy coin standing the test of time, but we are only a few years in. All of this technology is highly experimental and blockchain analysis companies are working hard to de-anonymize it.

My point is, don't put all your eggs in one basket. Consider a multi-stage approach to mixing/tumbling. Don't ever assume that any one link in the chain is fully secure. Honeypots are everywhere, and small cryptocurrency networks (even with privacy features) can essentially be honeypots due to their size.

This is true, but it only applies to Bitcoin to an extent. Silver doesn't entail a digital network whose transactions are published by miners.

I believe we are in a growth/hype phase where mining concentration is driven only by ability to cheaply manufacture ASICs and cheap/subsidized electricity. However, it seems clear that we are transitioning to an era where government regulation is deeply affecting the ecosystem. Consider the Chinese crackdown on mining (including electricity subsidies). Canada is increasingly seen as attractive from a regulatory standpoint (in addition to cheap hydropower in certain localities).

But in this context, it is increasingly important to consider nation-state attacks and censorship. Bitcoin cannot be a store-of-value (or useful) if typical users cannot transact. There must be network liquidity. There must be a competitive mining ecosystem to prevent censorship. The consequences of lacking such (particularly due to Bitmain's dominance) may become clearer over time.

ASIC mining may not be profitable for casual users. But consider three things. First, this never-ending trend in difficulty increase (the growth hype phase mentioned above) will not last forever. The time to invest is when blood is in the streets, not when hype is at its peak. Second, "profitability" should not only be considered on a short term overhead basis. Consider mining as a long term investment, not some immediate USD ROI. Also, consider it as an investment in the currency, since decentralized mining is required to secure Bitcoin from majority-miner attacks. Third, consider potential future transactions costs, particularly large UTXO consolidations. At some point, you may need to mine (including pooling hash power) in order to ensure that your transactions are published on the network at all.

I don't think that's what he did. He said we could increase the block size that way. He then went on to say that Bitcoin users might become increasingly tyrannical about blockchain size.


Maybe that was a flaw in Bitcoin's design. On the flip side, ASICs can exploit excess capacity, which in turn secures Bitcoin's proof-of-work.


80% of the supply has already been mined. How long are we supposed to wait? More importantly, Bitcoin is an opt-in network. Why limit yourself to Bitcoin if you are so worried about fees?

Good technology takes time. That's why Lightning and Rootstock have taken so long. But now they are coming to fruition. It's better to introduce new systems with different risk/trust models that can integrate with Bitcoin than to contentiously hard fork at this point.

Bump.

I can sympathize with Satoshi's sentiment there, but he didn't build incentives for that into Bitcoin's design. The system relies on rational mining incentive: miners publish transactions because they are incentivized to mine for block rewards and collect the fees.

And for years, miners largely enforced node policy that reserved some space for "priority" transactions, including old coins sent with no fees. But miners are rational. When fee income became significant, they removed that node policy and started maximizing the fees they collect.

It's the mining incentive -- and therefore the protocol itself -- which resulted in this situation. This is the only way the system can guarantee block rewards in the future, once most of the 21 million coin supply is mined. And that's why Bcash will probably fail: when the block subsidy drops to zero, so will mining output, because fee income won't replace subsidy income.

No doubt about that. But I'm not too concerned. Anyone touting the Bitcoin protocol as some perfect, instant or cheap/free system is simply wrong. That's the cost of decentralization; it's a simple decentralized messaging protocol. Every message comes with storage, bandwidth and propagation costs.


I hear you. This was, however, a byproduct of the ecosystem that Satoshi foresaw as well. Mainstream adoption of a deflationary money necessarily means the cost to adopt it will increase, especially in the context of decentralization, where every transaction adds costs to the system.

There are systems that can interact with Bitcoin's protocol that can significantly lower the costs and delays associated with it -- with potential security and privacy trade-offs. Lightning and sidechains are both a reality now. It'll be interesting to see how their adoption affects on-chain traffic, especially since interacting with them requires on-chain transactions.

I'm cautiously optimistic, but I won't lie. I am genuinely disturbed by the greed and cult-like behavior we see in this "community." I think that we can build a better future with decentralized tools like cryptocurrency, but I'm almost looking forward to a bear market where the price doesn't dominate all discussions.

Not surprising. I expect similar actions across the globe. This is what government does best: scare you into paying taxes. I'm curious how they plan to "to ensure cryptocurrency investors are paying the correct amount of tax" though. Blockchain analysis is getting more sophisticated, but I suspect they are blowing smoke up our ass with that.

I don't think they have the means or ability to aggressively deal with decentralized exchanges, unregulated exchanges, mixers, IP address obfuscation, etc. But they probably have lots of "low hanging fruit" to pick, because lots of people apparently use regulated exchanges like Coinbase but don't pay their taxes.

I give him credit for that. His opinion on Bitcoin is negative, but he fully accepts his lack of expertise and won't put his money where his mouth is. That's fair enough. He's profited quite well in his time; no need to catch every investment opportunity.

Bitcoiners give Buffett a lot of shit, but he's not wrong here:

It's a lot easier to game market capitalization with cryptocurrencies. There are no securities filings. Highly concentrated supply can be obfuscated.

But more to the point, money (including Bitcoin) is generally backed by faith -- faith that it will continue to have widespread acceptance and will hold value. Predicting whether people's faith shifts in favor of one cryptocurrency or another is a risky game.

Buffett is correct that value is not being created when the Bitcoin market cap increases. It's merely shifting value from one asset class to another. He's focused on value investing, which necessarily does not apply to Bitcoin. Fair enough.

It seems like they are offering investment management/advisement and brokerage services. The point is that cryptocurrencies are foreign to mainstream investors. People want to invest in them, but are scared to touch them. They don't understand the technology, how custody works and how to properly secure their assets.

That's why Coinbase is pushing an institutional custody product as well. Lots of money is waiting on the sidelines for more reliable, regulated and compliant services where institutional investors feel safer. These guys are just in it for the money, not for the freedom that Bitcoin was designed to provide.

You will get:

-Bittrex account with basic verification (US-based; 0.4 BTC/day withdrawal limit)
-2FA not yet activated
-Linked email account (used only with this Bittrex account)

The account has no funding/trading history. I opened it a couple months ago intending to trade and never got around to it. PM me an offer if you are interested. Serious offers only. I deal only through PMs on this forum. Payment in BTC or ETH.

I also have an unverified Bitfinex account (no trading history, UK-based) that I'm willing to part with.

Change addresses have everything to do with privacy. That's the only reason they exist. They aren't required to receive "change" from partially spent outputs. If you don't use change addresses, change is simply returned to the sending address.


Transactions can be constructed such that it isn't clear which addresses are change addresses and which are payments. Further, multiple change addresses can be used. An observer cannot know (without other corroborating information) which of the involved addresses are under the control of one person (or group of people).


Obviously. But that may be impossible. You could be compromised in various ways, no matter how good your operational security is. I always consider that at some point, my identity will be linked to some outputs, whether through a third party service or a compromise. Therefore, it's irrational to be sloppy and link all my wallets and addresses together.