well the fact of the matter is your bitcoin profits are directly dependent of miners making bitcoins for you to buy in the first place. as more miners join the network it becomes harder for each miner to get bitcoins and the price goes up. everybody is winning here. money all around.
the difference is, if bitcoins went to 50 cents tomorrow, people that recently bought bitcoins would lose a lot of money but my machines would still be making me profit.
How would your machines be making a profit? Are you neglecting the initial cost of them? If rigs were free or extremely low cost, then yes, you would since electricity costs alone would need a huge difficulty. If miners actually closed down shop when prices dropped, difficulty would decrease. But the economics of the situation does not dictate this. Miners that already purchased rigs should only shut down if the electricity costs plus any damage to their hardware from use exceeds the value they mine. This is again the same example, give me $10,000, I'll give you $1 a day, and I guess you are profitable since you are always making $1. But I'd rather invest my $10,000 in a stock or mutual fund or bond, which is risky, but at least not a retarded investment in most reasonable situations. |
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http://www.searchenginejournal.com/new-google-grant-awards-researchers-with-cpu-power/29122/"This program, dubbed the “Exacycle for Visiting Faculty Grant Program,” will distribute a billion core-hours to researchers around the globe. Exactly what “core-hours” mean in technical specifications is actually difficult to pinpoint, as core-hours isn’t one of the standard tracking units for CPU work (“bitcoins” being the more commonly used computation tracking unit). However, Google assures applicants that the amount granted represents a “magnitude larger than the computational resources most scientists normally have access to.” I thought it was funny that some reporter did a quick google and decided that a "bitcoin" was a unit of measure of computational work. ....Not exactly wrong, but far from right  LOL reporters. Good God they are dumb. I remember how terrible they were for the high school newspapers, but it turns out they never get better. |
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But then consumers won't want to spend bitcoins. They would rather hold them since they are rising and spend fiat currency which is falling. Merchants won't bother to offer BTC prices since it will not get enough use. A situation where the price of something (BTC) is far in excess of its actual utility happens all the time in markets, but then you get the inevitable downdraft. I know it is very powerful to believe in the "always upwards if we leave it alone" idea but we need the wisdom to see both sides of it.
Just a thought: What if bitcoin replaced all the money in the world, what would its present value be in USD? The velocity of money in the US historically has been approximately 2, meaning there is half the amount of money as GDP (the money turns over on average twice a year). I don't know what it is in other countries, but just guessing that is reasonable worldwide, and the world economy is approaching $60T, I get ($60T/2)/21M ~= $1.43 Million per BTC present value. That is the theoretical end value of the deflation once it hits 21M cap and replaces all the fiat currency. After that monetary theory says it will deflate or inflate at the GDP growth rate if velocity does not change.
I know that sounds rather attractive, but it won't happen. It will unravel before then, who knows next month or next year.
But you can't eat Bitcoins. You can't do anything with them. I can accumulate all the money I want, but I'll die of starvation or have no enjoyment of life. That will encourage people to spend. |
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To understand why you are wrong, you need to understand the genesis behind the idea of Bitcoin. Interestingly enough, it started with the goal of stopping bulk spam. The reason why there aren't dump trucks backing up to your mailbox each morning to unload massive amounts of spam is because there is a larger cost associated with sending postal mail versus email. There's the cost of the ink, paper, envelope and stamp. This means that any spam that can't recoup those costs simply doesn't get sent. Contrast that with email which is orders of magnitudes cheaper, the price being whatever it costs to send a few bytes over an Internet connection. So, the idea was to attach a higher cost to emails in much the same way that postal mail has a higher cost. There are several schemes. One of these is run by a company called "GoodMail". They convinced a bunch of email providers to give certain emails a special icon in your inbox. These icons only display if you pay an extra fee to send the email. This prevents spammers from having such a huge economic incentive for sending spam, if they want the special icon. The service still exists but it really hasn't caught on. However, a precursor to this idea was called "HashCash". Instead of charging money outright, it is based on a proof-of-work system. Under this system, you run a program and it starts generating tokens by using CPU resources. You attach a token to each email you send and the recipient can verify your token for relatively no cost. This makes it easy for the typical user to send and receive emails while making bulk spam prohibitively expensive. After this system was proposed, someone came to the natural conclusion that there would be individuals that wouldn’t want to run the program but instead would rather buy the tokens outright. This gave rise to the idea of an entire market based on buying and selling tokens. Fast forward over a decade later and the creator of Bitcoin says, “Hey, who cares about email? Let’s use this stuff for money!” The rest is history. So, what's my point? My point is that Bitcoin is a proof-of-work system which has value as a good because people, even if not used as money, would still want to use Bitcoins to prevent bulk spam. I imagine that if/when Bitcoin becomes widespread, we will see an actual implementation of this where sending an email costs a tiny fraction of a BTC. I really hope this will put to rest the myth that Bitcoin has no possible use aside from being a medium of exchange. I think that's the crux. Possible uses vs. current uses. People who say they aren't that useful RIGHT NOW are correct. There may be an occasional coincidence of wants, where someone wants Bitcoins and someone else wants Alpaca socks, and both parties have what the other wants. If you don't have what the other guy wants (he will only trade Alpaca socks for BTC), you'll have to go get some, which takes time, overhead, transaction costs, etc... Basically all the downsides of barter economies. So a lot of people are only capable of looking at the present. "Why would I want to use it RIGHT NOW?" And the answer is mostly novelty and a few goods you can only purchase with BTC. And while current use is an important factor in the value, it's not the only one. Right now people are gambling on possible uses. That's not a bad thing. It encourages investment in BTC. If people are showing they think it will be used for something, then it makes sense to build the infrastructure to actually support getting paid in BTC. Someone comes up with a business model that's based on them being valuable, and that's good. |
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I haven't been able to get on mtgox last night, it hangs.
Do you have some section of tape showing trade history where small trades are at huge spreads and wide volatility? Do they tape their whole order book, or just time/price/quantity?
While margin and short selling should add liquidity, it is controversial whether it decreases or increases volatility. It would have to be tried. Narrow spreads that you talk of seems counter to a thin market. Options require active committed market makers, if we don't have a strong market in the underlying not sure that will help. But mtgox had an "options coming soon" note on their site.
I'm not sure you can look at previous market depths. You can look at the current depth, though. They do only show 125 orders closest to the highest bid/lowest ask prices. The spreads are sometimes small, but sometimes huge. Even when the spread is small, there are often only a few bids or asks at those prices. If I wanted to sell 1000 BTC immediately, the last trade was 3.441. The current highest bid is also 3.441. If I sold, the price would drop to 3.301. Fairly significant for not really that much to sell. If I wanted to buy 1000 BTC, the lowest ask is 3.462. So only a 2 cent spread, which is nothing. But at 3.441 the bid is for 171 coins, and the ask is for 2.84. To go up to that 171 coins, I'd have to move the price to 3.51, so it's closer to 7 cents. Not that bad, but it's only for a super tiny order. For 1000 BTC, I would need to drive the price all the way to 3.5699 to get enough asks to cover my order. 3.559 vs. 3.301 is a 26 cent spread for a fairly small order. Pretty significant. Now add in a single investor that wants $10,000 of action. To buy, I'd drive the price to 3.65, I'd end up with 2784 coins at a price of $3.59 on average). To sell $10,000 worth, I'd drive the price to 3.14, selling 3046.35 coins at an average price of $3.28. So that's a $.31 spread in a fairly large order. |
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Seems like an even better deal for me.
I'll also make the same arrangement with Bitcoins. If anyone wants to give me 10,000 bitcoins now, I'll be happy to give them 1 BTC every day for the rest of their lives.
Are you feeling generous today ?  Either that, or he knows a hit man who accepts Bitcoins. Na, I just understand math. |
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Did my trollish subject get you here?
I'm wondering if any Ron Paul supporters are going to be setting up any Bitcoin related Ron Paul services, such as a central place where Bitcoins could be converted to dollars (and the total reported, showing how many Bitcoins people are willing to give to help his campaign) which are donated to the Ron Paul campaign. Or a place that sells Ron Paul stuff, like shirts, buttons, and blimps. It's kind of late to be thinking about, but he has a big money bomb the 5th for the first debates.
I think it's probably too difficult to legally do this for donations. Too many requirements in knowing who is sending the money and such. But selling campaign material probably is kosher, as long as you don't do any trademark infringements or something. Someone with more official capacity could put Bitcoin for donations, and sell them immediately and gather the same personal info required of anyone donating cash. There are cash limits no how much any person can contribute, so the value would have to be calculated right away. I should also add that supporting Gary Johnson is also going to be a good thing if you like Ron Paul. I'd love to see both of them on the stage together so that it won't be as easy to say they are kooks when they aren't alone. I'll talk to my friend who's wife works for RP to see if they are interested at all if you want. It might not be big enough to be worth the effort, though. To set it up, they may have to spend a lot of money, which is more than they'd bring in, so the funds would be better spent doing other things. |
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Give me $10,000. I'll give you $1 a day. Long term income FTW!
Really? 3.65% interest for life? That's not bad these days. Normally when you get 3.65% interest, you get your original money back. You don't actually get the money for 28 years. Then you start making the interest. I think I can grow $10,000 pretty high in 28 years, even paying $365 a year out of it. By year 28, I'll have $16,818. Not too shabby. I have an interest only loan on $10,000. But that's the miner logic. Keep being a sucker at math. I don't think we have 28 more years of the US Dollar, TBH... Seems like an even better deal for me. I'll also make the same arrangement with Bitcoins. If anyone wants to give me 10,000 bitcoins now, I'll be happy to give them 1 BTC every day for the rest of their lives. |
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To be honest I think it's only a matter of time. You will know that it started when you will see "PEDOPHILES USE BITCOIN CURRENCY" headlines in mainstream media. Politicians and bankers will not give away their power over money just like that. But I don't think they are able to destroy Bitcoin, just like they can't get rid of other P2P networks.
They don't need to stop it, they just need to scare a lot of people from using it. |
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Give me $10,000. I'll give you $1 a day. Long term income FTW!
Really? 3.65% interest for life? That's not bad these days. Normally when you get 3.65% interest, you get your original money back. You don't actually get the money for 28 years. Then you start making the interest. I think I can grow $10,000 pretty high in 28 years, even paying $365 a year out of it. By year 28, I'll have $16,818. Not too shabby. I have an interest only loan on $10,000. But that's the miner logic. Keep being a sucker at math. It's true. I see the math challenges people trying to convince themselves over and over again that their decision to mine was the best decision here on this forum. In fact I'm so tired of this misinformation that I've been trying to tell my own story in hope to sway this more in the middle. ' People need to know that bunch of insecure teens trying to convince their hardware investment was worth it to each other is not a sound investment advice. Not saying my advice is better in anyway, but my own situation does tell a different story to theirs that shows another side of the issue. Others who are trying to do the same are only getting cornered by them saying that we have our own interest. While the interest may overlap unintentionally, the fact remains true and numbers don't lie. And it's not that mining is a terrible idea or anything. But it is not something to take lightly and not an instant gold mine. It depends on a lot of factors, many of which are very difficult to predict. It's just if you are going to dump a ton of money into something for profit, you probably should at least make an effort to see if it's your best approach. But if you enjoy mining and consider it entertaining, then maybe that is enough to make up for the suboptimal approach. |
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This is very similar to my current real situation after buying hardware to mine. I admit I was swept away by the decentralized idea based currency and a chance at profit. But in hindsight, investing in the currency and buying instead of paying electricity would have definitely paid off more with a whole lot less headaches of setting up miners and dealing with additional heat at home.
I'm tired of seeing new miners nerd raging about mining being profitable when in reality they also could have easily been more profitable if they invested instead as well. Sure I made some money so far to cover my cost of hardware because I got in earlier, but I could have easily triple the amount of money I made if I invested personally. People think that I'm trying to sway people away from mining when infact I'm just sharing my own experience. If I had to do it again, I would simply invest because I believe in BTC and it's outlook being bullish over long term. More price goes up more profits I make by investing rather than mining. This is certainly less risky and more long term than mining. Not to mention no more ongoing cost or inc difficulty to account for.
People say mining is safer long term, but this is exact opposite from the truth as someone who can think like Tom here finally demonstrated for the people to see for themselves.
It's not a conspiracy theory to keep people from mining... I wish all the "mine or die" crowd to stop being so dense. Mining is not end to all bitcoin profits and far from it. It's a fact it's the opposite. If you still decided to mine I hope you make your money back, but don't try to make people think that it's the best option when it's not. I stand by my words.
I was going to post something very similar. I was lured in by the nerd factor, and without fully educating myself on the market, I jumped into mining. The nerd-factor of it all has been fun, and I wanted a new video card anyway; although I spent more on a new card than I would have had I not known about bitcoin. Nevertheless, in hindsight, I wish I would have just invested the same amount of money into buying bitcoins. I would have already more than tripled my investment. If you are just buying a single card, and it has some value to you on its own, then you can very well be more profitable than buying BTC under all but the most extreme price increases. It all depends on a lot of variables and what your projections are. For my example, if the rig I had would cost me $1200 or less, it would have been far superior to mine. I can recover my investment before difficulty increases too much in that case, and then I only have to mine better than electricity rates (not hard where I live and with an efficient card). |
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anisoptera fixed rake code. so room take rake now.
We do not charge rake if the hand ends on the first betting round - before the flop.
Heads-Up: we collect 1% rake with x5 BB cap and 0.5 BTC absolute cap.
Round: we collect 1% rake with x10 BB cap and 2 BTC absolute cap.
This should help us to develop it faster since we have incentive now =)
Good luck. |
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+1
People please recognise genius and elegance of bitcoin and stop trying to bloat it.
If you are not capable of the above. Go make your own currency with whatever bloat you want in it.
But what if we made a new block chain and pegged it to blowjobs? Then I could mine for those! |
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Give me $10,000. I'll give you $1 a day. Long term income FTW!
Really? 3.65% interest for life? That's not bad these days. Normally when you get 3.65% interest, you get your original money back. You don't actually get the money for 28 years. Then you start making the interest. I think I can grow $10,000 pretty high in 28 years, even paying $365 a year out of it. By year 28, I'll have $16,818. Not too shabby. I have an interest only loan on $10,000. But that's the miner logic. Keep being a sucker at math. |
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Hey, I may have plugged the wrong device into the Kill-A-Watt, but I stand by my math. At the end of the day, I guess I have to admit to doing this for fun. Because you're right, the gutsy move is to invest in the currency directly. But that would keep me up at night, whereas seeing bitcoins spontaneously form is like enjoying a really slow variation of roulette. Why is spending money on hardware not keeping you up at night? Because you physically have something? If what you mine is worthless, you are screwed too, but you do have some hardware you can sell for something I suppose. So just compare the residual value of the hardware (what you would pay for it if you had to resell it or just what you would use it for), and compare that difference. The attitude seems to be more of "I want a new computer, and hopefully it pays for itself" more than slow roulette. |
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Just my own story. I bought my first bitcoin mining rig and got it mining on April 1st. 2x5970's, system cost me $1500. In April it made just under 500 bitcoins for me. I sold them when bitcoins hit $3.80 shortly before coinpal went down. I made enough money in one month to pay for the machine and the electricity it used. So yes, building a mining rig right now is still very profitable.
mtGox price on Apr 1- $.70 $1500/ .70 = 2142.86BTC mtGox price now - $3.205 2142.86 * 3.205 = $6867 Total Profit: $5367.86 vs. Total Profit of $0 (your numbers). Fantastic decision! I'm not one for speculation. Give me a long term income any day. Give me $10,000. I'll give you $1 a day. Long term income FTW! |
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Right, let's take a market and two extreme points in the past, than assume we buy at the exact bottom, and than sell at exact top. Moreover, the market moved like 600% between the extremes.
Than we compare this with any other investment on the planet and say fi.
What a bunch of rear mirror drivers.
If I bought BRK/A sometime in the past for 10$ I would be even smarter than you guys.
I've run this with projections including flat price, small growth, huge growth, drop in prices, complete collapse, etc... You may come out ahead if the price of Bitcoins drops or stays even by mining rather than buying and holding. That was about it, and it wasn't by a significant margins. The mining guy cherry picked it to say he was right. Sorry he was wrong. And yes, the faster the price goes up, the worse the decision to mine is. Nothing to do with rear view mirror. My projections are going forward. My guess is very very very few miners who are putting $2k+ into rigs even bother to try that, let alone are capable of it. |
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I for one love these threads where people take a genius idea, then try to put a twist on it, and make it an absolutely horrible one.
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Now some facts would be interesting:
You stated "few users". How many users are there?
You state "huge speculation" and "super thin market". Please point me to some market depth and trade data that supports this.
Of course having it scarce makes it valuable. That's kind of the point. Scarcity is pretty important for a currency to work. It's not the only thing, though. No idea how many users, but my guess is under 10,000. mtgox.com. Market cap ~$20M. You can buy all the coins on the market for under $30k (at least last time I checked before they went down). That jumps the price tremendously. Try to sell 20k bitcoins, and the price drops tremendously. Try selling $30K of any stock on a major index. See what happens to the price. Try buying $30k of stock, see what happens to the price. It barely moves. Because the market is well-traded. How would this create "sell side pressure"? It would make people try to spend them to get rid of whatever they could by making them worthless? Perhaps. Try to actually explain your arguments instead of state assertions. I explained in depth how commercial trade usage would create sell side pressure in other posts that I thought you were monitoring. I can dig back and repost. Do you have tape showing the price movement on 20k BTC trades you mentioned? Can you post some piece of it? I have looked at mtgox before but assumed that is only a fraction of the market since the depth is rediculously small. You can't tell the true depth anyway because obviously large liquidity is not going to be posted in the order book. I also assumed that there are other markets and the largest volume is OTC. Bitcoin encourages OTC by its very nature, more so than most other trade I can think of. So some ticker examples of lack of elasticity would support the point since it should draw liquidity away from OTC and other venues if only temporarily. Just look at the market depth. Does mtgox publish its complete historical tape?
I can think of all the usual methods for promoting liquidity but they are controversial in the real (old?) world as well. Such as steps to encourage more market makers, rules for minimum liquidity, facilities for margin and short selling, rules for pricer discovery, etc etc etc I'm sure you're familiar with the litany. Need to think about how to do some of that p2p.
Yes. You can see every trade that has happened. Market makers have no incentive to be there due to the low volume and spread. Perhaps adding options or other more advanced features will help. |
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I think it will be some time before any government tries to outright ban the use of Bitcoin, if at all. By the time that happens, I think it will have little effect, just as attempts to prevent use of bittorrent have had little effect.
You can not fully compare Bitcoin to Bittorrent. A Bittorrent user that downloads a torrent from the newest episode of his favorite TV series on his backroom computer is something different than a business, that publicly announces, that it accepts BTC. No WAI! GOVERNMENT STUPID, BITCOINS USERS SMART! WE WILL DESTROY THEM! |
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