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December 14, 2017, 05:34:24 PM *
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1  Economy / Economics / One Interesting Consequence of the Bitcoin Price on: December 08, 2017, 02:20:54 AM
The mining reward is designed to automatically adjust so that blocks will be found - and BTC issued - at a predictable rate.

A side effect is that miners can choose to mine, or not, at any given moment, purely based on whether mining at that moment would be profitable.

And thus, mining will generally cost exactly as much as the block reward (because it gets easier/harder until that's true).

In other words, any particular BTC spot price carries with it an assumption about how much it costs to mine a block. And mining happens in the real world, using real infrastructure.



Large scale power plants these days generally costs between 5-10/kWh. That includes both clean energy and dirty.

If one bitcoin is worth $100,000... the implication is that 72GW are being generated, somewhere, to run mining hardware.
If one bitcoin is worth $1 million... the implication is that 720GW are being expended.

Let's assume this is mostly "clean energy", so that we don't stay up at night worrying about greenhouse gas emissions.

72GW requires about 2700 square miles of land devoted to solar farms - about the size of Luxemborg.
720GW requires about 27,000 square miles - about the size of Panama.

Naturally, this would not all be in one place. It'd be spread out, integrated into the places where mining rigs happen to be. But that's still an incredible amount of infrastructure - of physical stuff - all dedicated simply to outvoting an adversary.



For a Proof of Work based system to reach these heights, then, means that it is not simply a thing that exists ephemerally, on networks and in ledgers.

Rather, it must exist, physically, among us, all over the real world.
2  Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion on: November 27, 2017, 05:07:10 PM
pro tip: don't forget to create your own charity where you can donate to!
I mean, that's not a bad idea, so long as you steer clear of self-dealing.
3  Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion on: November 27, 2017, 04:52:24 PM
amazing you said that...  I've been having 100% of my paycheck taken out in taxes since september in order to cover capital gains taxes this year Sad  
Hot tip: consider making an in-kind donation of BTC to your favorite charity.

In-kind donations give you the usual deduction, but also don't count as a capital gain (b/c you never sold or traded it - just gave it away).

This means if you have, say, 10BTC you want to liquidate, you can sell 5BTC and donate 5BTC, and the deductions from the donated part will cancel out the tax burden of the sold part.

(Of course it's a little more complicated than that due to the IRS's reporting requirements for in-kind donations of weird stuff. IANACPA, talk to yours, etc.)
4  Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion on: November 17, 2017, 12:06:39 AM
Is that LTC just pumping - or are people using it for ways to transfer money cheaply between exchanges?
I don't know about anyone else, but I definitely used it for this purpose during the BitcoinCash fork.
5  Economy / Exchanges / Re: KRAKEN not executing my orders nor let me cancel !?! on: November 14, 2017, 02:08:17 AM
Another thing I forgot to mention. In a very honest implementation of a trading platform (as it should be):
   All stop loss orders will be executed exactly at the stop price - not one bit lower or higher.
Uh, isn't that impossible in a lot of cases? The exchange can't control when and where market makers decide to place - or cancel - a limit order. How could they possibly guarantee that a stop loss order will find someone else willing to buy, at exactly that price, in the middle of a crash?

Or are you suggesting that exchanges should be the counterparty themselves? That seems like a recipe for disaster.
6  Economy / Speculation / Re: What happens when the "Greens" object to bitcoin on: November 10, 2017, 06:04:17 PM
Why only focus on Proof of Stake? There are other interesting technologies that could be used.

I admit that I lack a deep technological understanding, but for me, Bram Cohen's (Bittorrent creator) "Proof of Space" could be an interesting alternative. It's more similar to standard PoW mining because everybody can start mining "from zero" using external resources. But it wastes less electricity, because the "attack price" is not based primarily on the electricity price used to carry out the attack. (There is already an experimental altcoin called "Burst" using a similar algorithm).

In the case it's proven secure, I see no problem in Bitcoin adopting that technology.
Good point. Proof of Space and Proof of Liveness are definitely possibilities too, at least in terms of moving off "electricity" (with all its baggage) as the scarce resource of choice.

As for "mining with only external resources"... well, there's pros and cons to that. The fact that (with proof of work/space/etc) people can enter the system without establishing a link to "someone who bought the coins" is a powerful property for a cryptocurrency to have... but so is being able to "self-host", without consuming any physically scarce resource at all.
7  Economy / Speculation / Re: What happens when the "Greens" object to bitcoin on: November 09, 2017, 09:28:39 PM
We still might see PoW being the go-to algorithm for coins that wants to get the highest level of security possible for their utilization like bitcoin.
I'm not sure PoW is actually higher-security than second-generation (N@S-resistant) PoS. One big advantage of Proof of Stake is that a 51% attacker can only double-spend once (since executing the attack destroys their stake), whereas a PoW 51% attacker can attack again and again (they still have their mining hardware to give it another go).
8  Economy / Speculation / Re: What happens when the "Greens" object to bitcoin on: November 09, 2017, 08:15:51 PM
I mean, they're already objecting. I've seen a lot of Twitter chatter on the topic lately.

Long-term, I figure the most likely outcomes are:
  • Wind/solar become so cheap/plentiful that they outcompete even (e.g.) coal plants in Inner Mongolia for pure BTC/kWh.
  • A Bitcoin proof-of-stake fork gets broad community adoption.
  • A non-Bitcoin proof-of-stake coin (Casper Ethereum, f'rex) ends up becoming the dominant cryptocoin for everyday users.

It's also possible that the BTC ecosystem just soldiers on, not caring about its externalities on the literal ecosystem, and its network effects (first mover advantage etc) let it get away with that. But IMO that's a bad outcome, and probably not as likely as the above.
9  Economy / Speculation / Re: Investing in BTC, ETH , BCH or XRP on: November 07, 2017, 12:22:50 AM
Here's how I see it:
  • An investment in BTC is (right now) a bet that transaction scaling can be solved mostly off-chain, and/or a bet on the power of network effects (more likely to be adopted?) and mature code (less buggy?).
  • An investment in BCH, by comparison, is a bet that transaction scaling can be solved mostly on-chain, but that Segwit2x will fail.
  • An investment in ETH is a bet on Proof of Stake (by way of Casper), and/or on smart contracts.
  • An investment in XRP is a bet that major stakeholders can be prevented from flagrantly misbehaving by social - rather than technical - pressures. (Ripple's double-spend protection works based on individually-curated "these stakeholders wouldn't collaborate to defraud me" whitelists.)
   
I think energy scarcity and global warming mean the coin of the future will have to be Proof of Stake, one way or another, and smart contracts have always excited me. So I like ETH as a long-term bet.

But I also like BTC's first-mover advantage.

Your priorities, and your beliefs about the outcome of those "bets", may be different from my own. Smiley

is it good to wait until bitcoin fork ( 15 november ) or not ?
If you are going to buy into BTC, I would recommend getting in before the fork, mainly so that you don't have to guess whether Segwit2x will be adopted or not; you'll get your coins' value either way.
10  Economy / Speculation / Re: What if: an old hand dumps all their coins right now? on: November 05, 2017, 11:15:36 PM
Thanks for the replies, all.

To be clear, this really is a "What If" scenario more than anything else. I agree that in most cases, such a person probably wouldn't try to dump all their coins all at once. With current order books, it'd be better to do the job in small batches; even if you're worried about people noticing a huge, old coin stockpile moving on the blockchain, and trying to front-run it onto the exchanges, there's ways to cover your butt - those cash-settled BTC futures that CBOE is going to launch soon, for instance.

I think if a huge holder like this did just do a market sell, the price would recover almost instantly. That kind of thing actually happens already from time to time, when someone with deep pockets fat-fingers a trade (see, for example, June 23rd 2016 on Bitstamp, or June 22nd 2017 on GDAX). The price almost always recovers instantly, because the order books on one exchange only represent a tiny fraction of the actual demand.

But a slow sell-off could also work out okay. About 10,000 BTC are traded daily on any major exchange, so 2-3kBTC daily might fly under the radar without tripping dedicated traders' "big money is cashing out for some reason" alarms. It does mean that you have to wait a few months to get all your money, but with withdrawl limits at most major exchanges (as @dothebeats mentioned), that was probably true already.

This seems all like science fiction-conspiracy theory. First of all, show me the actual proof. Where did the guy that made this research come up with these entities from?

Show me the evidence (with links to a blockchain explorer) of 2,886,650 BTC belonging to the same entity.

Supposedly, Satoshi was the highest stakeholder with near 1 million BTC. This is easy to find, you just need to sum all the early mined BTC. And I heard some people say it was never anywhere close to 1 million anyway.

So who could this entity A be and where is the proof of 78,251 addresses pointing to entity A?
Paper is here, including methodology. The appendix includes transaction graphs, with amounts and datestamps included.
11  Economy / Speculation / What if: an old hand dumps all their coins right now? on: November 04, 2017, 03:23:06 PM
First, a little bit of background.

In 2012, Dorit Ron and Adi Shamir published a paper analyzing the Bitcoin transaction graph, in an attempt to understand how much could be determined about the largest BTC holders, just from the publicly available info.

They concluded, among other things, that there were a dozen or so "entities" who - even in 2012 - were holding several hundred thousand BTC each:

Entity ID
Address Count
Total Incoming BTC
Transaction Count
A
78,251
2,886,650
246,012
B (Mt.Gox)
156,722
2,206,170
477,526
C
13,289
941,013
77,525
D
12,520
867,996
48,347
E
191
692,864
1,353
F
12
660,000
23
G (Instawallet)
23,649
633,606
92,593
H
9
580,000
59
I
10,561
514,066
49,550
J
4
500,021
6
K
134
479,254
1,039
L (Deepbit)
2
452,929
814,044
M
9
442,000
10
N
128
432,161
137
O
10
432,286
14
P
1
432,078
3
Q
14
430,490
23
R
2,124
321,866
300,486



Last night, I dreamt that I checked BitcoinCharts on my phone, only to see that someone had dumped a huge number of BTC onto the exchanges, causing the price to crash to about $2.

As you can see from the above chart, this is not an impossible situation. The whole order book of the big exchanges is "only" about 200,000 BTC deep. If one of these Entities were to rediscover a lost wallet... or if the price were to reach their "exit price" that they'd decided upon long ago... it's easy to imagine that "get all of my money out before anyone can react" would become more important for them than getting the absolute best price for it.

So my question here is... if this were to happen, what would happen next? Would the price bounce back, bolstered by confidence that this sort of holder was less likely to still be lurking around? Or would people get scared, and try to sell off their own BTC too? How would miners act? How would exchanges act? Et cetera.
12  Economy / Speculation / Re: Is it more wise to invest in Bitcoin or in Ethereum for the next 5 years? on: October 25, 2017, 05:01:36 PM
Lots of people have talked technicals (what seems to be "going up", price movements, etc), so I'm gonna talk fundamentals for a bit.

BTC is still the king as far as "what can you buy with it" and "how hard is it to 51% attack", and network effects mean that those advantages are hard to overcome.

However, Ethereum seems much better at getting technical improvements pushed through. Features continue to be added, bugs continue to be fixed, etc, without much drama, even when it requires a breaking change. Bitcoin, lately, has not been so good at that (18 months between the HKC and SegWit getting enabled, with multiple forks along the way); it's harder for me to be certain that, five years from now, we will see much progress on the longstanding bugs/issues that weren't fixed by SegWit.

So long story made short? Even though I've previously held only BTC as my cryptocoin of choice, I'm considering rebalancing into a 70%-30% split based on the above.
13  Economy / Speculation / Re: North Korea threatens 'unimaginable' strike on United States on: October 19, 2017, 08:56:40 PM
Gold is usually a safe haven in times of crisis.  Why don't you think cryptocurrencies will be?
There's a donut hole of crisis.

If the situation is catastrophic enough to put national currencies and contract enforcement in doubt, "hard money" becomes important for trading with strangers - and Bitcoin is the hardest digital currency right now. So that might end up "good for Bitcoin" in a sense.

But if the situation is catastrophic enough to put the availability of an Internet connection in doubt, Bitcoin is useless, because the network can't gossip and converge (there was a thread a while back about how we might be able to failover to HAM radio, but I doubt that's been built yet).

So for a time of crisis to be good for cryptocoins, it has to land in that narrow landing zone - where the crisis threatens confidence in the governments, but doesn't bring down the infrastructure.
14  Economy / Speculation / Re: This family bet it all on Bitcoin on: October 18, 2017, 03:43:49 PM
I mean, I wish them the best, but... *points down at my signature*

They're already up 2x if they pulled the trigger "several months ago", so I hope they at least have the good sense to cash back out their initial buy-in ASAP instead of staying in this leveraged-over-your-dead-body state for any longer than necessary. But I'm not optimistic that this sort of quixotic enthusiasm can comprehend the words "realize your gains".
15  Economy / Speculation / Re: Will BCH kill BTCSegWit while reinstating BTCSatoshi? on: October 12, 2017, 02:56:02 PM
Realpolitik (PoW is a plutocracy, big money decides, etc) aside, I have problems with this kind of attitude:
Quote
I find it very exciting. I would love to see so many people lose their BTC. It is a perfect way to teach people to stop disrespecting people who try to be helpful and who are knowledgeable.
Do you think most users are ideologues? Do you think punishing the ones who are ideologues is worth this? Maybe regular users don't have political power, but this level of not giving a shit about them on a personal level is baffling to me.
16  Economy / Speculation / Re: Another Bitcoin fork on 25 October on: October 12, 2017, 12:14:51 AM
from article 5 days ago:
Quote from: CoinTelegraph
The project was apparently co-founded by Jack Liao, CEO of Hong Kong-based Bitcoin mining company LightningASIC. LightningASIC also conveniently sells the hardware that this new market of miners will need.
(hardware in question)
17  Economy / Speculation / Re: Segwit2x vs 1 MB on: October 11, 2017, 02:08:13 AM
By supporting segwit2x, you will not only lose money and look like an idiot afterwards, but you will be on the wrong side story, again. As we have seen with bitcoin xt, Cash, unlimited, and whatever else, hardforks never win, and the more hardfork attempts, the weaker they become and the stronger that the real bitcoin becomes, it's like a negative asymptotic curve, it will tend to 0, so you always win by holding real BTC and dumping forks (unless a fork has somehow 100% consensus)
I get you. To a large extent I agree, which is why I think "Segwit2x becomes another BCH" - i.e., a semi-irrelevant satellite - is one of the two likely outcomes. But let me put forward a counterpoint.

What makes Bitcoin valuable in the first place? I'd argue that the most base, most meaningful factor is that transactions are atomic and irreversible.

Okay, what makes them atomic and irreversible? It's that, in order to reverse a transaction, someone would have to have more computing power than the rest of the network put together.

Now, I don't like that miners have taken the law into their own hands on this topic. Miner incentives are not really aligned properly vis block size questions. That's part of why, when the Hong Kong Consensus called for 2MB blocks (called for them! planned to implement them!) it gated their rollout behind "broad acceptance" by the ecosystem.

But the problem is, if 90% of the hashpower really does move to Segwit2x, staying on the 1MB+ blockchain now puts my atomicity and irreversibility at risk, because there now exist many, many pools with the hashpower to unilaterally 51% attack my preferred ledger. I'm not talking about Jihan Wu here; an operation the size of Slush or BTCC, with sufficient ideological motivation, would have enough power on their own to render the 1MB+ blockchain literally unusable.

Now, if that happens, would some of the other NYA signatories switch back to mining 1MB+ to outvote that asshole? Hopefully! That's what's happened when ideological splits have happened on other coins. But now we have to worry about it, when we didn't before. Isn't that a reason for businesses to switch to Segwit2x regardless of their ideological take on how it was rolled out?

That's what makes this fork different from the others, and why I feel like there's risk here where there wasn't in past splits.
18  Economy / Speculation / Re: Segwit2x vs 1 MB on: October 09, 2017, 10:16:05 PM
I'm hoping for this fork to be short-lived, TBH.

The way I see it, either Segwit2x doesn't attract the hashpower we think, lands with a whimper, and becomes another BitcoinCash... or the 1MB(+witness) chain gets abandoned by miners, services follow, and eventually the bitcoin.org client adopts the size bump out of practical necessity.

So I'll wait to see which it is. No rush. If I'm wrong, then both sides of the fork will have value, which means I can reassess at that point.
19  Economy / Speculation / Re: btcgpu? dafuk is that? on: August 31, 2017, 08:47:48 PM
  • claims to be a BTC fork but has a 20000 BTC premine
  • seems to fundamentally misunderstand how "longest chain" logic actually works
  • supposed to fork at the same time as BitcoinABC but there's still no client 1 month later
  • nor any details on the proof of work function other than "it's GPU only"
  • in fact, none of the links work at all
tl;dr looks like someone was trying to get rich by forking, but got bored and left when it became clear that nobody cared
20  Economy / Speculation / The Mood on: August 22, 2017, 10:14:58 PM


(Who am I talking about? Bulls? Bears? BitcoinCasheers? That's for you to decide Wink)
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