Thank you for your responses. You guys are teaching me something new. Let me clarify please.
Yes, I purchased bitcoin on Coinbase with fiat (USD). And no, I have not yet moved the bitcoin from Coinbase to my cold wallet. So, if I understand your responses, then:
1. Even though Coinbase indicates that I own the bitcoin, the blockchain contains no record of my purchase, or of any transfer of bitcoin to me. Correct?
2. If there is no record in the blockchain, and if Coinbase disappears tomorrow, then my ownership of bitcoin also disappears. Also correct?
3. I guess you are telling me that, as a general rule, whenever I purchase bitcoin, I should promptly transfer the bitcoin to my cold wallet. Again correct?
4. And lastly, when I do transfer the bitcoin to my cold wallet, I then will see a TXID showing a transfer to bitcoin to me? But what will the other side of the transaction look like (ie. from whom will the bitcoin be transferred)?
Thanks again.
1. No transfer has actually taken place, except in Coinbase's records. They simply credit your account and debit another account. 2. Yes. 3. Promptly is up to you. Many people don't bother because letting Coinbase hold their bitcoins may be convenient (until it isn't). 4. When Coinbase transfers your coins to an address in your wallet outside of Coinbase, it must be done via a transaction on the block chain. Transactions don't have sides. They just record the transfer of coins from one address to another. |
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Here is what I think:
I think the only way to profit from inflation is to borrow money to buy income-generating assets whose income and value keep up with inflation.
You don't profit from inflation by simply buying assets like gold or Bitcoin because their value simply keeps up with inflation and does not necessarily increase in real terms.
In order to profit from inflation, you must borrow money. The profit comes from repaying the loan with inflated money. The purpose of buying an asset is to get rid of the money before it is inflated and replace it with an asset whose value does not drop. The purpose of buying an income-generating asset is to ensure that you can repay the loan with inflated money. It also helps avoid the trap on being taxed on the nominal gains due to inflation.
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My thought was that I would have to close this account, pay the 10% penalty, pay other fees/taxes, then buy BTC outright. Someone mention that I may be able to transfer this IRA $ from said institution to another institution who offers/participates in BTC, not have to pay penalty, taxes etc....; but his knowledge was only slightly greater than mine.
I know that you can transfer funds and assets from one IRA account to another IRA account without penalty, but I don't know the details. I know of two ways to investing in BTC in an IRA. You can go to a company that specifically deals with IRA accounts that hold bitcoins, or you can buy shares of GBTC in an IRA that allows you to pick your own stocks. |
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I watched the entire hearing and it was surprisingly positive toward mining and cryptocurrencies. There were no environmentalists testifying and very little discussion on environmental impact, and minimal discussion on any negative impact of energy usage.
I suspect that there will be other hearings in which the environmentalists will get their chance to speak.
The representative from Virginia even asked the Bitfury speaker to talk to him later about building mining operations in Virginia.
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OK, then there’s greater demand, which makes the price surge, in spite of the increased selling-pressure after a halving. My next question is, then what’s your opinion on Plan B’s Stock To Flow Model? Is it then naive to assume that Bitcoin will simply increase in price because of the halvings?
First, two exponential functions can be graphed to look as if they are correlated simply by adjusting the scales. Second, price is determined by supply and demand, but Plan B's stock-to-flow model completely ignores demand. Without demand, you cannot predict prices. The model cannot be accurate, except by luck or after-the-fact adjustments. Finally, it looks like the predictions made by his S2F model are wrong. According to the model, the price should be exceeding $100k, but it is falling below $40k instead. I get stock-to-flow. It is basically a way of characterizing changes in supply. It is not sufficient for predicting prices. |
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... bubble. ...
... bubble ...
... bubble ... bubble ...
... bubble ...
... bubble ...
... bubble ...
... bubble ... bubble...
... bubbles ...
A bubble perhaps, but definitely not a Ponzi. |
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I'm really curious about how Russians feel about the impending invasion of Ukraine.
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I understand that bitcoin volatility is caused by demand and supply. Then, there is fixed 21million supply, ...
Volatility is caused lack of liquidity, or the mismatch between the quantities of supply and demand. Supply and demand apply to markets. As long as there are people willing to sell bitcoins, there will be a supply. As long as there are people willing to buy bitcoins, there will be a demand. It has nothing to do with the 21 million limit. Bitcoin and Ethereum uses the PoW consensus. Why does ethereum now process transactions faster than bitcoin.
Throughput is determined by the size and frequency of blocks. Ethereum blocks are generally smaller but are produced much more frequently. Since blind signature says a resulting blind signature can be publicly verified against the original(unblinded message). Why does bitcoin not make Alice address disguised(blinded) to Bob and yet it can be verified by miners or checked on explorer.
A blind signature hides the contents of a message (i.e. the transaction). The address is part of a Bitcoin transaction and Bitcoin would not work if transactions were not public (though other protocols do hide the details of transactions). Also, if Bob can see the address in a block explorer, then why hide it from him? |
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No.
Can we please move on now?
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I meant issuance is reduced by half after every halving, and therefore also reducing selling-pressure.
I included the exchange inflows chart above to dispel that belief. You belief that the halving reduces the number of bitcoins sent to exchanges and thereby reduces "selling-pressure". However, the chart shows exactly the opposite -- the number of bitcoins sent to exchanges increases after a halving (in two instances). |
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This part of the article describing how Grayscale's holdings are structured is confusing to me: The trust doesn’t allow for share redemptions in the same manner as an exchange-traded fund, meaning that the supply of shares can’t be created and destroyed with shifting demand. As a result, the shares tumbled deeply as investors pulled sharply back from cryptocurrencies, exacerbating the discount in the share price. So they're not like a mutual fund where you can just buy and sell shares on the market? I admit I'm not very familiar with Grayscale except for them being a large institutional holder of bitcoin, but if one is able to purchase whatever shares they're offering at a discount to bitcoin's price (if that's indeed what the article is implying), why hasn't someone done so before it made the news? The shares of the trust are freely tradeable, but the the underlying assets in the trust are not. Shares are created by depositing bitcoins into the trust, but those shares cannot be redeemed for the bitcoins in the trust. It is basically a one-way peg. There are many possible reasons for why there is a discount, including the possibility that there will always be a discount. In contrast, shares in an ETF can be redeemed for the underlying assets (by a so-called "Authorized Participant"). If there is a discount, then APs will buy and redeem the shares, and then sell the assets for a quick profit. This action reduces the discount by raising the price of the shares and (in a small way) lowering the value of the assets. It works the other way for ETFs, too. If there is a premium, then APs will buy and deposit assets for shares, and then sell the shares for a quick profit. This action reduces the premium by lowering the price of the shares and (in a small way) raising the value of the assets. |
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Privacy-protected: Protecting consumer privacy is critical. Any CBDC would need to strike an
appropriate balance, however, between safeguarding the privacy rights of consumers and affording
the transparency necessary to deter criminal activity.
The problem is that privacy can never be guaranteed unless the "balance" is permanently fixed. Otherwise, it can be changed at any time at the whim of the current government. With the current trend of financial surveillance toward 100% of all transactions, I don't see any hope of any balance at all. Intermediated: The Federal Reserve Act does not authorize direct Federal Reserve accounts for individuals, ... Potential intermediaries could include commercial banks and regulated nonbank financial service providers, ... Although commercial banks and nonbanks would offer services to individuals to manage their CBDC holdings and payments ... An intermediated model would facilitate the use of the private sector’s existing privacy and identity-management frameworks; leverage the private sector’s ability to innovate; and reduce the prospects for destabilizing disruptions to the well-functioning U.S. financial system.
The intended difference between a CBDC and the current monetary system really boils down to one thing -- finality of payments. However if all payments must go through intermediaries, then there really is no finality as the intermediaries could undo any payments at any time. Identity-verified: ... A CBDC would need to be designed to comply with [rules designed to combat money laundering and the financing of terrorism]. In practice, this would mean that a CBDC intermediary would need to verify the identity of a person accessing CBDC, just as banks and other financial institutions currently verify the identities of their customers.
That's a non-starter for me. Already the "balance" of privacy vs. security is non-existent. It also restricts access to persons and only those who are identifiable. |
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The Federal Reserve has released their white paper on CBDCs. Money and Payments: The U.S. Dollar in the Age of Digital TransformationThe Federal Reserve is asking for comments on their paper, so it is my intention to take the most notable points in the comments below and submit them to the Federal Reserve. The Executive Summary introduction: For a nation’s economy to function effectively, its citizens must have confidence in its money and payment services. The Federal Reserve, as the nation’s central bank, works to maintain the public’s confidence by fostering monetary stability, financial stability, and a safe and efficient payment system.
This paper is the first step in a public discussion between the Federal Reserve and stakeholders about central bank digital currencies (CBDCs). For the purpose of this paper, a CBDC is defined as a digital liability of a central bank that is widely available to the general public. In this respect, it is analogous to a digital form of paper money. The paper has been designed to foster a broad and transparent public dialogue about CBDCs in general, and about the potential benefits and risks of a U.S. CBDC. The paper is not intended to advance any specific policy outcome, nor is it intended to signal that the Federal Reserve will make any imminent decisions about the appropriateness of issuing a U.S. CBDC.
Note: This topic is moderated. Comments that are not related to the white paper will be removed. |
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People know the effect of the halving long before the halving actually occurs. If that is the cause then you would see the effect before the halving.
I debated about that during 2020, whether the halving was priced in, or not. I said the same thing as you, but I was proven wrong by the market. It’s the same as years 2012, and 2016. The price surged after the halving, showing everyone that it was not truly priced in. As I have already documented, the price surged after a halving only in 2012 (and then again a year later). Other surges were not until at least a year after a halving. Also, people ignore that the 2011 price surge was before the 2012 halving. Furthermore, the price had risen significantly before each halving. How is that not evidence that the halving was "priced in"? The surges later do not disprove it. Interestingly, Litecoin does show this effect. In both Litecoin halvings, the price rose sharply until just prior to the halving. Then, the bubble popped and the price fell sharply, and it continued to fall after the halving.
It’s probably no one really values Litecoin? That is not true of course, but it shouldn't matter either way. I think that it shows that speculation is much more of a factor in Litecoin because the effect was so strong. I believe that the actual causes of the Bitcoin bubbles are similar, but more general. News about the halvings or other events generates interest and promotes speculation, which which feeds on itself and slowly evolves into a bubble.
Finally, if we attribute the bubbles to what people believe about the supply and not the supply itself, then the bubbles have little to do with money supply and everything to do with demand.
But the supply itself does reduce after a halving. Not true. The supply is always increasing toward 21 million before, during, and after a halving. Inflows to exchanges increased after the last two halvings. Supply is not reduced by a halving no matter how you measure it. |
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So Microsoft's implementation of the metaverse is World of Warcraft?
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I don't think it will work the way you intend, because the miner would always get the block reward plus the transaction reward. In addition to finding the hash for a block, the miner would create transactions until she found a winner.
Also, your implementation doesn't resolve the case of multiple winners.
Finally, do we really need to incentivize more transactions? People will create transactions just to win the transaction award (if you can figure out how to prevent the miner from always winning it).
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Your description is complicated. Perhaps some diagrams and examples would help. When an output is created, a transaction that spends it is created too and it's txid is embedded in the output before it gets published.
So, the intended receiver creates a transaction that spends the output he is receiving and gives the txid to the sender to insert into the transaction, right? In order for the receiver to create the transaction that spends the output, he needs the output's txid. How does the sender compute that txid without the txid of the receiver's transaction? It's a circular dependency. He then publishes the transactions that he just spent (advanced delegation) and sends his new transaction and sigs to the receiver in secret. Once the receiver sees those spent transactions on the network, they validate the transaction that the sender just sent to him. The receiver then creates two new transactions of his own, one that spends the sender's payment output and one that spends his own output. He then publishes the last two spent transactions as a pair.
Again, how do you create a txid for a transaction that is incomplete? If the txid of the followup transaction is not included in a transaction's hash, then nothing prevents someone from creating double-spending transactions. |
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Bitcoin's money supply is completely unaffected by anything. Isn't that noteworthy? What asset keeps having the same supply (or supply schedule) regardless of the demand? Only (those that work like) Bitcoin. In other words: What other asset has this difficulty feature? I'm going to stop because I think I've made my point (perhaps poorly) and I feel this discussion is becoming a distraction to your main topic. Something else to note -- the statement that the supply is fixed at 21 million is not quite true. The max supply is 21 million, but the actual supply is not fixed. The money supply is actually rising toward 21 million and will start falling at some point due to lost coins. |
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... what are the two axes? One is money supply (Q) and the other is ...? Considering it a currency may confuse the situation, so let's say it's just a product. One is the product's supply (Q) and the other is product's price (P). So, by "completely inelastic", you mean that Bitcoin's money supply in completely unaffected by price. Is that noteworthy? I think it's stating the obvious. Bitcoin's money supply is completely unaffected by anything. In the end, I don't think the term elasticity is appropriate for Bitcoin because the money supply is not allowed to vary. If it could, then Bitcoin would be elastic just like fiat. In other words, there is no elasticity because there is no curve. It is only a point and a point has no slope. |
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It is important to note that market supply is not the same as money supply. Of course. But, the market supply is affected less if the money supply is completely inelastic. I don't disagree, but ... FYI, elasticity refers to the slope of the curve. Exactly. Bitcoin's money supply curve is a straight line vertical to the quantity (Q s) axis. There's no other asset with E s = 0. ... what are the two axes? One is money supply and the other is ...? Consider Dogecoin. It is inflationary, so I would assume that you would consider its money supply to be elastic. But, what are the two variables that you use to measure elasticity? Money supply and ...? |
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