As it says in my signature, I cannot imagine a plausible future where bitcoin will be successful.  I see many ways in which it could fail, those are two of them.  The more I read, the more skeptical I become.

Take the economy of mining, for example. Yesterday I found this paper claiming that the bitcoin mining network now consumes about as much electricity as the whole country of Ireland , ~1 GW.  I found that hard to believe, but it seems correct.  For what? So that some drug dealers can be absolutely certan that their customer will not double-spend them? So that no one can retroactively change the amount that someone spent on Overstock?  So that the police cannot seize the coins of ransomware criminals?

That absurd consumption of energy does not have any rational justification.  It does not even make the network more secure against 51% attacks, because it is still the case that 4-5 mining entities have more than 51% of the hashing power, and that situation is more likely to get worse than better if the network grows more.  Moreover, further price drops and/or the next halving may cause morethan 51% of the hashpower to be turned off -- and may be acquired or rented by a hostile entity, at scrap iron prices.

The absurd consumption of energy is merely a consequence of the block reward being fixed at 50 BTC irrespective of the price, and of the price being 50 times what the current use as currency would imply.  The overvaluation, in turn, is a consequence of the fixed supply, that created the mirage of a currency whose value will grow to astronomic levels; a mirage that led to a spiral of hoarding and absurd price increases.   The overvaluation also resulted in the block reward being 100 times or more the typical fees contained in a block, so that miners have essentially no incentive to include transactions in it.  Worse, the network consumes about 1 million dollars per day that must be provided by new investors, lured by the promise of fabulous speculative gains.  And the absurd will only grow if the price increases again.

This system simply does not make any economic sense.  It is not sustained by sound market principles, but totally by hype, by the belief of gullible people that they will become billionaries if they just buy as much bitcoin as they can and hold hard to it.

From what I have read around, most people who claim to believe in bitcoin's future do so because of various reasons -- because they own bitcoins, because they are employees or investors of bitcoin-related enterprises, because they see it as a way to buy drugs and other illegal things, because of hallucinations about it ending poverty, corruption, banks, governments... but almost never because they rationally believe that it will be a viable currency and efficient payment system.  Which is the only thing that it was designed to be, and it is becoming clear to everybody that it will not be.

If bitcoin survives and grows, I think that it is quite likely that the protocol will be amended with a government-mandated "black list" of coins that cannot be moved, and a "white list" of transactions that must be accepted even without a valid signature.  

If bitcoin succeeds, it is even possible that the current blockchain will have to be junked, and a new blockchain be restarted with suitable legal constraints and devices.

In either case, the bitcoiners who understand the goals of bitcoin will surely scream and claim (with reason) that those violations of the basic principles render the coin worthless.  The other 99% will not even understand what the fuss is about, and will mostly ignore the changes, or even approve them...

If bitcoin collapses to 0 $/BTC, there will be thousands of furious bagholders screaming 'ponzi' and looking for someone to sue. Most early adopters who cashed out in time may be able to claim that they only believed the spiel and were just lucky.  The unlucky ones, and law enforcement, will go after the man who conceived and implemented the scam.  If he were to pocket hundreds of millions... Guess where that money would have come out of.  

He sells his coins and prays for doom. Is this how Tarmi's are born ??

Edit: if this works, tomorrow I hit the LCBO on the corner.

Mah monkey gots this one.







@Empowering, drunk selling 20 BTC at 235. *SMH

Dear Everybody. Make more sense!

I love my monkey.

Laser sights.

 

1. He seems to confuse miners with nodes and compares sha256 asics to conventional servers. He also claims that the 10min block time can easily be changed seemingly without understanding the implications of that. Then he alludes to a closed loop system with vendors without any specifics, and if the previous points are not simply due to intentional over simplification or provocation I fear that they might hit a snag that they can't get past.
 
2. Exchange scandals, illicit activities, scams, theft, worst investment of the year awards.


Edit: 2. And right wing extremist libertarian loons.

I just read the Coindesk article about 21. Not convinced. I don't think the 21 guy knows what he's talking about. It might fall flat on its face.

These charts are relative AFAIK; so if BFX had a 20k bidwall pop up, bitstamp and coinbase would appear as almost totally flat. When coinbase had that 5k bidwall, it did the same thing to BFX/Bitstamp, to a lesser degree. Now that it's gone, BFX appears to have a mountain of bids.

Fortress Investment Group (manages 58 billion $ portfolio): bought 20 M$ in bitcoins in late 2013, reported paper loss of 3.7 M$ on that investment in early 2014, invested some money on Pantera's fund management comany.  I can't find any mention of bitcoin by them after that.

Overstock: They were the first big store to accept bitcoin through BitPay. At first they opted to some percentage of their sales in real bitcoins, but then they stopped doing that, they now get 100% dollars.  At the end of 2014 they held only 340,000 $ worth of bitcoins (~1500 BTC), versus 180 M $ in cash and 10 M $ in precious metals(!). Sales paid in bitcoins dropped after the first months, and amounted to only 3 M $ in 2014 (out of ~ 1.5 billion $ in total sales), all domestic.

DigitalBTC: An australian bitcoin mining and trading company now trying to switch to bitcoin software products.  For the 2nd semester of 2014 they reported 1.2 M$ sales of software, 8.7 M$ revenue from bitcoin trading, 4.6 M$ from mining -- but "Net Loss After Tax of $2.3 million due primarily to non-cash accounting adjustments to the fair value of bitcoin inventory and performance rights and depreciation"

Tim Draper: bought 30'000 BTC at the first USMS auction (~650 $/BTC), 2000 at the second one (~350 $/BTC), did not bid for the third.

The Bitcoin Foundation:  nearly broke, had to let go most of its staff; due in part to them keeping their funds in bitcoin.


I don't understand your point.  Yes, Wall Street does not see oil as being worth more than 60 $/barrel right now.  So?

"Something else" in relation to what?  How do you propose to measure the value of oil or bitcoin, except by watching how much people are wlling to bid and ask for it?

You don't quite get how supply and demand works. Halving the supply doesn't mean doubling of the price, and vice-versa.
Let me try to explain.

You're on an island with 19 of your friends, and suddenly 10 of you become vampires, who need exactly 1 pint of human blood/day to stay alive. But you're still friends, because vampires or not, you're still bitcoiners.

By strange stroke of luck, it turns out each one of you who is still human can part with a pint of blood/day. Your vampire buddies feed on you, and you have sustainable equilibrium. Being bitcoiners, the humans charge vampires for their blood, as much as possible.

Now imagine what would happen to the price if just one of your human buddies decided to withhold his blood from the market? That's right, a bidding war would ensue for the remaining 9 pints of blood, prices go through the roof, not simply "up by 10%."
Conversely, if one of the vampires died due to sunburn, blood prices would plummet - there's 10 pints available while there's only demand for 9.

If you're still having trouble grasping this, don't hesitate to ask for more help

At the risk of stating the obvious: Oil has lost half of its value because supply & demand. There supply/demand equilibrium is reflected in the current price.
Hope this helps

Is that a fact?  Entities that have invested in bitcoin (Fortress, Overstock, DigitalBTC, Tim Draper, The Bitcoin Foundation) seem to have regretted it, and did not want to repeat the experience.  They could have bought shares of BIT from SecondMarket, but they didn't.  They could have bought raw bitcoins (brokers would be happy to assemble large lots for them), but they didn't.  (Risk is not a concern for large investors, they can hire expertise and guard their coins as safely as COIN would do.)

Wall Street obviously does not see bitcoin as being worth more than 220 $/BTC right now...  

So what are the chances that Wall Street is starting to buy BTC on Huobi and Finex tomorrow? 85%? 97% 110%?