What's the "intrinsic value theory of money"? An intrinsic theory of value (such as a labor theory of value) is primarily not about money, and it most certainly does not hold that all value is subjective.
Intrinsic theory of value then. It's important that we are precise in our terms. In a field where precision is paramount, screwing up your terminology just leads to misunderstandings.  Well played. :p |
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What's the "intrinsic value theory of money"? An intrinsic theory of value (such as a labor theory of value) is primarily not about money, and it most certainly does not hold that all value is subjective.
Intrinsic theory of value then. Yes, all value is subjective; even 'intrinsic' value. |
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No, no. Runing a full node that is 'quiet' is not "taking without giving back". Dark nodes are a certainty that not all nodes are discoverable. This is a feature, not a bug. There are attack vectors, against the p2p network model itself, that are undermined by the very concept that dark nodes can (and do) exist. They become a repository of the true blockchain, should (as an example) a viral vector is discovered within the network itself, permitting a malicious player to exploit all visable nodes at network speeds. Dark nodes (probably) promise some degree of insulation from such an exploit, as well as the certainty that the attacker cannot ever be certain of success of such an attempt, since it's not verifiable. The fact that some nodes are discoverable and others are not isn't a problem.
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Good God! I'm looking at three pages of posts wherein some members are, quite literally, arguing semantics.
This is why I said early on that 'intrinsic value' is a bad term to use, because it's imprecise, and means slightly different things in different contexts. In a field where precision is paramount, it just leads to misunderstandings.
Let me help...
When used in an economic sense, "intrinsic value" is better stated as, "the value that the owner might attribute to some intrinsice characteristics or properties common to the object". It was never a theory that an object can have a definable value as an intrinic property unto itself. Even within the context of 'intrinsic value theory of money', all value is subjective. Which is why we need markets to tell us what the price is. (There is no way to determine how much any particular person may value his purchase, beyond what he is apparently willing to pay for it; but even then, the price isn't usually set by the buyer, but by what the next willing buyer isn't willing to pay. Using ebay as an example, the final price of any auction is determined by what the first loser isn't willing to bid, not what the winner was willing to pay to win.)
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What you here refer to as the value of the total amount of labor is known as "cost", or unit cost  Correct! I wrote that pretty fast, but I felt that no one else was saying it  Unit cost is not such a very good measurement of value. If something is only worth its cost, one is better off expending that same cost on something else with more virtue. That further suggests the design would be a poor one, and valueless. True, however as that energy could have been expended to produce other work, as you can most likely (however more indirectly) convert the economic cost to electricity consumption, you can figure out the value of the production of a bitcoin in comparison to other energy intensive exploits, such as gold mining, food production, etc. Would you guys value such a calculation? I might get to work and try and derive a total economic value up to this point, but I don't know if I can easily get data on the cost to produce all the PH/s that we currently use, unless I take a standard total electric cost/PH/s What you guys are discussing here is commonly called the 'labor theory of value' in economices, and is generally considered a false method of valuation. As an example, I might be able to get competitive bids on how much it woudl cost me to have a 16 foot by 8 foot by 8 foot hole dug in my backyard, but that does not mean that I can automaticly increase the selling price of my home by the labor cost of theat swimming pool. The value of the property is whatever the buyer with the highest desire is willing and able to offer for it. |
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Bunch of killjoys, I swear!
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And this is why the term "intrinsic value" is such a poor choice of words.
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While I haven't actually cracked any of these riddles, and probally never will (riddles are not my gift), I do get the feeling that I might be a solution.
Not feeling it, do you know something we don't ?  Probably not. |
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Thankyou for your reply MoonShadow. I had doubts three or four years ago, but I aired my doubts and, in every case, my concerned were shown to be due to an error in my own understanding of how bitcoin actually works. This remains to be the case, for now I am one of only a couple thousand people in the world that understands the nuances of the protocol, and I spend a great deal of my free time on this forum correcting similar errors of understanding where I find it. So are you saying you no longer have any doubts about BTC? There is no doubt in your mind that it will be a success for those 'investing' in it in 2013? Predictions are hard, particularly those about the future. However, I think that it's a safe bet that someone investing funds into bitcoin now wouldn't lose buying power should they be willing to hold them for 6 months or more. I'm in a HOLD pattern myself, but the concept of Bitcoins are not at risk, as far as I am concerned. Bitcoins is the most transparent currency in human history. As a direct consequence, it's easy to disprove your claim above. Liquidity isn't a function of the entire stock of bitcoins turning over, as tis never happens to any currency. Liquidityis a function of "velocity" of money, and in the bitcoin world this can be measured in "bitcoin-days-destroyed". https://en.bitcoin.it/wiki/Bitcoin_Days_Destroyedhttps://blockchain.info/charts/bitcoin-days-destroyedhttps://blockchain.info/charts/bitcoin-days-destroyed-cumulativeIf you look at the peak point in that middle link, that is nearly 4.5 million Bitcoin-days-destroyed in a single 24 hour period. That means that one third of all bitcoins in circulation were spent or otherwise moved in a single day. No currency in the world, and probably none in human history, has ever had velocity on that scale. 'Bitcoin days destroyed' isn't the same as liquidity. If you had 10,000 BTC sitting there (from say a pizza sale) for 1.25 years and sold them all you would 'destroy' 4.5m bitcoin days. This seems to me to be a crazy way to measure liquidity. To be fair, you're mostly right. Liquidity implies that someone is willing to buy your coins immediately, and with regard to theis, Bitcoin-days-destroyed can be distorted. However, there are no better metrics in the fiat currency world, at least not concurrent ones. How many BTC have actually changed hands in the past 12 months? We cannot know. The best we can hope to know is how many have changed wallets but one person can have more than one wallet.
Yes, and this is how BDD can be gamed. Another metric for liquidity might be the ask/dib walls on the major exchanges. The liquidity is there, though the market still isn't very deep. There are more economic incentives for mining than just the block reward. Most obvious, is that transaction fees go tothe miners directly. Miners are also expected to be compensated in an indirect fasion. Us the search function with regard to the term "Walmart/Mcdonalds allaince" Has anybody done any calculations on what price will be required to make it economically viable for miners to process transactions years down the track? And considered what happens if and when the price drops below that amount? No calculations can be done, because that assumes we know what the right amount of mining power is correct. WE don't, and can't really, know that. Right now the bitcoin network is clocking in around 60,000 Petaflops ( http://bitcoinwatch.com/) while the largest single supercomputer publicly known in the world runs around 33 petaflops. It is a safe bet that 60K petaflops is an order of magnatude more than is presently required, but apparetnly we can afford it. Bitcoin has the first to market advantage, as well as a network advantage. Ask those old guys who bought Betamax video players about first to market. Who is sitting on a goldmine worth of VHS players today? I'm sure that you know that is a red herring. Nothing stops them from fractional reserve banking practices, if they are honest about it, but that same transparency that the blockchain provides to economics analysis, also permits continous auditting of institutional finances. Said another way, it's impossible for an online wallet service, acting as a bank, to loan out member's funds without the transfer being observable. So long as the service is open and truthful about their intentions of loaning out your deposited funds when you open your account, you don't have a complaint (and neither does anyone else) when they actually do so.
How could you or I perform an 'audit' on Mt Gox or BTC-e? If you know what the pool address was when you deposited money to it, you could individually watch that address for changes in balance. More collectively, http://blockchain.info/ does these kinds of blockchain searches as part of it's function. Although that single data point isn't proof of anything, it still gives you a glimpse into the running books of MtGox. If such visability were possible in the US banking system, Leaman Brothers wouldn't have ever been able to get away with a 50:1 lending to reserve ratio. However, a fraudulantly fractional reserve lening institution might be able to get away with a much smaller ratio, say 2:1, for a time. |
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While I haven't actually cracked any of these riddles, and probally never will (riddles are not my gift), I do get the feeling that I might be a solution.
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Underlying this is an interesting question of just how do bitcoin movements breakdown between payments and transfers?
What you are asking is a difference in the intent of the interested parties, and due to the semi-anonymous nature of bitcoin, it's impossible for us to know the intent of these transactions unless those parties intend to tell us. |
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I understand that most people who post on this forum are bullish about BTC and its future. I wonder if those people are confident despite one or two lingering doubts? And if so what are these doubts?
I had doubts three or four years ago, but I aired my doubts and, in every case, my concerned were shown to be due to an error in my own understanding of how bitcoin actually works. This remains to be the case, for now I am one of only a couple thousand people in the world that understands the nuances of the protocol, and I spend a great deal of my free time on this forum correcting similar errors of understanding where I find it. As for me I love the fundamental principle behind cryptocurrency and would be very happy to see it play a role in subverting our corrupt governments but I do have some lingering doubts about BTC:
1) What happens when a big exchange crashes? As BTC becomes more valuable the incentive for an exchange operator to make off with the loot increases. So does the incentive for baddies to try to plunder the exchanges. It seems inevitable to me that one of the big exchanges will go down and when they do it will be mayhem.
Exchanges have already crashed in the past, and online wallet owners have stolen users' funds in the past. Not much changed when these events occured before, so if/when they occur again, I would reason that not much will occur to the greater bitcoin community then either. 2) There is no liquidity. How many BTC have actually changed hands in the past 12 months? It seems to me like 99% of BTC in existence have either been put into cold storage or longterm hot storage. Either way their owners haven't touched them and arent about to sell them yet. So the 'market cap' claims are rubbish because they extrapolate the price offered for 1% of all BTC across the whole lot mined up to this point.
Bitcoins is the most transparent currency in human history. As a direct consequence, it's easy to disprove your claim above. Liquidity isn't a function of the entire stock of bitcoins turning over, as tis never happens to any currency. Liquidityis a function of "velocity" of money, and in the bitcoin world this can be measured in "bitcoin-days-destroyed". https://en.bitcoin.it/wiki/Bitcoin_Days_Destroyedhttps://blockchain.info/charts/bitcoin-days-destroyedhttps://blockchain.info/charts/bitcoin-days-destroyed-cumulativeIf you look at the peak point in that middle link, that is nearly 4.5 million Bitcoin-days-destroyed in a single 24 hour period. That means that one third of all bitcoins in circulation were spent or otherwise moved in a single day. No currency in the world, and probably none in human history, has ever had velocity on that scale.
3) Why will people continue to process the blockchain in the future? It seems to me like the processing power required to keep the blockchain going even right now is already way too high and this will only get bigger. Why will computers continue to be used to keep the system going? It seems like it depends on increased 'price' growth but when this disappears so will the virtual system underpinning the currency.
There are more economic incentives for mining than just the block reward. Most obvious, is that transaction fees go tothe miners directly. Miners are also expected to be compensated in an indirect fasion. Us the search function with regard to the term "Walmart/Mcdonalds allaince" 4) What makes BTC any better than all of the alt currencies? Apart from higher uptake. If that is all it has going for it over the others then what happens if and when attention turns to the alt currencies and people begin to believe that one might overtake BTC? BTC will be destroyed as soon as it loses the single edge it has over the others.
Bitcoin has the first to market advantage, as well as a network advantage. Ask those old guys who bought Betamax video players about first to market. Ask those blue ray owners about the networking advantage. There is another thing that bothers me too. We know that banks practice fractional reserve banking. What is to stop online wallets from essentially doing the same thing? Especially in a market going up there is lots of incentive for them to do this. And the exchanges which make it hard to get money out essentially act like banks so they could be involved too. And if any online wallets or exchanges are taking advantage from fractional reserves then what happens when there is a run? How do we know they aren't claiming to have more BTC than they really do?
Nothing stops them from fractional reserve banking practices, if they are honest about it, but that same transparency that the blockchain provides to economics analysis, also permits continous auditting of institutional finances. Said another way, it's impossible for an online wallet service, acting as a bank, to loan out member's funds without the transfer being observable. So long as the service is open and truthful about their intentions of loaning out your deposited funds when you open your account, you don't have a complaint (and neither does anyone else) when they actually do so. |
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Well if a pool was looking to maximize the short term revenue, block with the highest possible net revenue is one with no transactions (other than the coinbase). A miner would simply mine only empty blocks and ignore all transactions even paying ones. The best estimate (with current protocol) is that the orphan cost is about 3.3 mBTC per kB. Paying tx are ~0.1 mBTC so the inclusion of any tx is a net loss of revenue. Are your numbers from Gavin's calculation? https://gist.github.com/gavinandresen/5044482 Back-of-the-envelope calculations for marginal cost of transactions (almost the same result, 3.2mBTC/kB) I guess we will see much higher TX fees then... If that is what it takes to get miners to pay attention to transactions, that's what it takes. |
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Bitcoin sends a lot of money back to the same user automatically, even when users aren't moving their own money around. This doesn't have a real-money analogy, as paying your electric bill doesn't transfer your Bank of America balance to Wells Fargo. Statistics that attempt to measure transaction volume inevitably miss this fact.
They also don't include off-network transactions. I never claimed that this was a particularly good comparison, but it certainly still is a milestone. |
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I think that $145Million transaction is actually only a $4,000 transaction made with a fat wallet.
This statement doesn't parse. |
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I can speculate on whether Branson as a member of the elite (Bilderberger, CFR member, etc) is playing ball as he has been perhaps told to. Or perhaps he really believes in Bitcoin. But he isn't here in these forums down in the trenches. And he doesn't see what I see technically. So let him end up as another Bitcoin idiot. Fine with me. I'd love to slay his ass if he puts his net worth in Bitcoin. But of course he isn't that stupid and so isn't endorsing it for himself, rather encouraging the greater fools who I am about to teach a lesson in market dynamics. The thread was closed because all the key arguments had been made and argued. I am one man against 100+ butt hurt Bitcoin zealots who are unable to read the thread before they post and were posting either redundant arguments or spamming the thread with "you are wrong, because you are wrong" 0-information non-arguments. I will go post a link from that thread to this one, so all your posts are acknowledged. Ain't No Future In Yo Frontin, " Shine it up good". Is this guy for real? Sounds to me like he is tripping on Ritalin. He might be, but only because he's really 14 years old, pretending to be some uber coder trying to convince everyone he alone has discovered the Great Bitcoin Flaw (tm). |
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Right, I'm off now to cook up a nice humble pie and your going to eat in right in front of us.  I'm pretty sure the Union of Government FUDders has a clause against eating humble pie while at work. |
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I thought of a way to reduce orphans: more full nodes on the network. Unfortunately, non-mining full nodes are not rewarded directly by the protocol. Also, most "miners" are not full nodes: they simply rely on pools. More nodes reduce orphans by speeding up block propagation: - By having more aggregate CPU power verifying transactions. Slow CPUs probably don't help too much for preventing orphans.
- By having more aggregate bandwidth for relaying transactions and blocks.
- More nodes make any successful DDOS more expensive to run.
My personal Bitcoin node has been in the planning stages for months. When up, it will have an average bandwidth of ~463kbps (burstable to 5Mbps). Calculation: (300GB/month(cap))/(30days/month)/(24hours/day)/(3600seconds/hour)*(8bits/byte)/2(symmetric bandwidth usage) If I get a second (or better paying) job, I will consider renting a dedicated server with ~7.7Mbps (burstable to 100Mbps) (5TB cap) Edit: read page 4: sending only block headers sounds like it just might work (assuming the node has seen all the transactions) Isn't every Wallet a node, providing that they are using bitcoin-QT? Yes, Bitcoin-QT is a full node. |
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I'm selling little blocks of BTC which I paid under $30 for a few years ago for the likes of $10,000 on my last sale. Needless to say, I'm enjoying it hugely. And I plan on sitting on a fair chunk if/when they collapse.
Wait, are you saying that you bought uncirculated block rewards for $30 each? And that you sold one of these 50 BTC blocks for $10K? |
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