Bitcoin's Biggest Downfall

[anderxander]

Does no one see this as an issue?

[MoonShadow]

Does no one see this as an issue?

It's a present cost of aquiring Bitcoins, and adds to the present risk, but it will slowly resolve itself as the Bitcoin economy grows.  So no, it's not really an issue.

[PLATO]

I love the idea of solar datacenters. More efficient solar panels would be nice.

You could take surplus cargo containers and wire them up with mining rigs, solar panels, MondoNet repeaters, whatever, then ship them around on rail to customers

[anderxander]

Check out Open Source Ecology and what they are doing with solar concentrators and steam engines.



Ok the "it will magically solve itself" is not an answer. It didn't magically solve itself for any of the other digital currencies that have failed and for all of the it was the need to convert them back to Centralized currencies.

We as a community need to invest in the technologies that will detach bitcoin from having to convert to centralized currencies.

[MoonShadow]

Ok the "it will magically solve itself" is not an answer. It didn't magically solve itself for any of the other digital currencies that have failed and for all of the it was the need to convert them back to Centralized currencies.

I never said it was magic, even though to some it might appear as such.  It's economics.  It's the 'network effect'.  As the Bitcoin economy grows, and thus comes to represent a greater portion of the total economy of any given region, the need of bitcoin holders to exchange out to a national fiat currency will decrease.  In the future, if you can spend bitcoin at Wal-Mart for your daily needs, you don't need to pay transaction fees nor trust some distant counterparty dealer.  You simply go to Wal-Mart and buy what you need directly, probably using your smartphone.  That is the end goal of this whole thing.  Fiat currencies have real limitations that make their use in cyberspace risky or difficult, but the reverse will soon no longer be so.

I would be surprised if the Euro existed in 10 years (in any recognizable form) even if Bitcoin didn't exist.  Now I think that not only will the Euro not exist in any dominate fashion, Europeans won't even care.  The US FRN will last longer, for many reasons, but will eventually fade away.  The governments that persist will have to adapt to a world wherein they have near zero control over the monetary system.

[marcus_of_augustus]

Does no one see this as an issue?

More of a feature than bug ... if every man and his dog was easily able to get into bitcoin right now the value would be through the roof and all the usual loudmouths would be screaming blue bloody bubble murder.

As for solar tech., when it is efficient enough to be viable the fat govt. subsidies won't be necessary.

Do you see anybody getting subsidies to buy high-tech mining equipment? ... that is what real tech. progress looks like, it's messy, it's chaotic, competitive but profitable.

[Bazil]

Ok the "it will magically solve itself" is not an answer. It didn't magically solve itself for any of the other digital currencies that have failed and for all of the it was the need to convert them back to Centralized currencies.

I never said it was magic, even though to some it might appear as such.  It's economics.  It's the 'network effect'.  As the Bitcoin economy grows, and thus comes to represent a greater portion of the total economy of any given region, the need of bitcoin holders to exchange out to a national fiat currency will decrease.  In the future, if you can spend bitcoin at Wal-Mart for your daily needs, you don't need to pay transaction fees nor trust some distant counterparty dealer.  You simply go to Wal-Mart and buy what you need directly, probably using your smartphone.  That is the end goal of this whole thing.  Fiat currencies have real limitations that make their use in cyberspace risky or difficult, but the reverse will soon no longer be so.

I would be surprised if the Euro existed in 10 years (in any recognizable form) even if Bitcoin didn't exist.  Now I think that not only will the Euro not exist in any dominate fashion, Europeans won't even care.  The US FRN will last longer, for many reasons, but will eventually fade away.  The governments that persist will have to adapt to a world wherein they have near zero control over the monetary system.

Once bitcoins come on to the scene in a serious way smart governments would smart to put their super computers to work generating bitcoins.  They could suddenly start hogging all the mining revenue.  And after bit coins can't be made any more they would be collecting most of the transaction fees.  At the end of the day they may not need to tax any more.  I think smart governments won't have too much of a problem if they embrace bitcoin instead of outlaw it.  They will have bigger problems with the emerging decentralized internet powers.

[MoonShadow]

Ok the "it will magically solve itself" is not an answer. It didn't magically solve itself for any of the other digital currencies that have failed and for all of the it was the need to convert them back to Centralized currencies.

I never said it was magic, even though to some it might appear as such.  It's economics.  It's the 'network effect'.  As the Bitcoin economy grows, and thus comes to represent a greater portion of the total economy of any given region, the need of bitcoin holders to exchange out to a national fiat currency will decrease.  In the future, if you can spend bitcoin at Wal-Mart for your daily needs, you don't need to pay transaction fees nor trust some distant counterparty dealer.  You simply go to Wal-Mart and buy what you need directly, probably using your smartphone.  That is the end goal of this whole thing.  Fiat currencies have real limitations that make their use in cyberspace risky or difficult, but the reverse will soon no longer be so.

I would be surprised if the Euro existed in 10 years (in any recognizable form) even if Bitcoin didn't exist.  Now I think that not only will the Euro not exist in any dominate fashion, Europeans won't even care.  The US FRN will last longer, for many reasons, but will eventually fade away.  The governments that persist will have to adapt to a world wherein they have near zero control over the monetary system.

Once bitcoins come on to the scene in a serious way smart governments would smart to put their super computers to work generating bitcoins.  They could suddenly start hogging all the mining revenue.  And after bit coins can't be made any more they would be collecting most of the transaction fees.  At the end of the day they may not need to tax any more.  I think smart governments won't have too much of a problem if they embrace bitcoin instead of outlaw it.  They will have bigger problems with the emerging decentralized internet powers.

As far as I'm concerned, they ccan go right ahead.  In fact, I'd expect that from a small, responsive and truly representative government such as Iceland.  Most governments, however, can't deal with new ideas.

[marcus_of_augustus]

smart governments ...

... you lost me at this point here ...

[MoonShadow]

smart governments ...

... you lost me at this point here ...

Kinda a contradiction in terms.

[thephfactor]

I see the biggest drawbacks as lack of physical presence and value fluctuation. The others seem to me to be soon fixed.

[anderxander]

someone has yet to answer my question of electricity.

[benjamindees]

It's a problem.  I've said so before.  Most people here don't see it as a problem, though.

[marcus_of_augustus]

It's a problem.  I've said so before.  Most people here don't see it as a problem, though.

What exactly is the problem? Electricity? The world is running out of electricity now? Lights are still on here.

I read somewhere that someone was using diesel generators for his Bitcoin rig. Sounds like a damn fine idea if you have the capital cost already sunk in the kit and all you need is diesel to run it.

[benjamindees]

What exactly is the problem? Electricity? The world is running out of electricity now? Lights are still on here.

I read somewhere that someone was using diesel generators for his Bitcoin rig. Sounds like a damn fine idea if you have the capital cost already sunk in the kit and all you need is diesel to run it.

The problem is that you can't buy electricity with Bitcoins.  You are dependent upon exchanges, which can be shut down.

Diesel doesn't help, it hurts.  Paying $0.30/kWh is ludicrous.  And you can't buy diesel with Bitcoins either.

[Bazil]

Maybe we can get a state to officially accept it as legal tender.  Utah just passed a law that makes gold a legal tender in their state.  Raise enough awareness in one state and that may be doable for bitcoin.

[marcus_of_augustus]

What exactly is the problem? Electricity? The world is running out of electricity now? Lights are still on here.

I read somewhere that someone was using diesel generators for his Bitcoin rig. Sounds like a damn fine idea if you have the capital cost already sunk in the kit and all you need is diesel to run it.

The problem is that you can't buy electricity with Bitcoins.  You are dependent upon exchanges, which can be shut down.

Diesel doesn't help, it hurts.  Paying $0.30/kWh is ludicrous.  And you can't buy diesel with Bitcoins either.

Bio-diesel? From switch-grass?

As long as you can convert to some other form of exchange and then buy the necessary equipment it is boot-strapping itself. Not being able to buy electricity or equipment with BTC is a moot point if the network resources can be got with alternative exchange mechanisms, albeit with fees and friction, not ideal but no biggie. The exchanges are a central weakness but there is the otc, f2f exchanges and other avenues springing up every day, it will work around any obstacles thrown up, the incentives are velly strong.

[anderxander]

What exactly is the problem? Electricity? The world is running out of electricity now? Lights are still on here.

I read somewhere that someone was using diesel generators for his Bitcoin rig. Sounds like a damn fine idea if you have the capital cost already sunk in the kit and all you need is diesel to run it.

The problem is that you can't buy electricity with Bitcoins.  You are dependent upon exchanges, which can be shut down.

Diesel doesn't help, it hurts.  Paying $0.30/kWh is ludicrous.  And you can't buy diesel with Bitcoins either.

Bio-diesel? From switch-grass?

As long as you can convert to some other form of exchange and then buy the necessary equipment it is boot-strapping itself. Not being able to buy electricity or equipment with BTC is a moot point if the network resources can be got with alternative exchange mechanisms, albeit with fees and friction, not ideal but no biggie. The exchanges are a central weakness but there is the otc, f2f exchanges and other avenues springing up every day, it will work around any obstacles thrown up, the incentives are velly strong.

If you have to rely on the national currency to pay for the electric. The bitcoin is only as good as the dollars you have to get to pay for the electricity to run the system. The OTC and f2f exchanges don't address the issue. You still have to convert to the currency you seek to replace to fund the currency you want to see in its place.

The problem is you're using a centralized currency to pay for centralized electric to run a decentralized system.

It's a weakness.

What exactly is the problem? Electricity? The world is running out of electricity now? Lights are still on here.

I read somewhere that someone was using diesel generators for his Bitcoin rig. Sounds like a damn fine idea if you have the capital cost already sunk in the kit and all you need is diesel to run it.

The problem is that you can't buy electricity with Bitcoins.  You are dependent upon exchanges, which can be shut down.

Diesel doesn't help, it hurts.  Paying $0.30/kWh is ludicrous.  And you can't buy diesel with Bitcoins either.

Look at Fator - E - Farm and their solar concentrator and steam engine.

This are a tiny cost in comparison to solar and wind and biodiesel.

though to run a data center you would need a combination of technologies.

[ChristianK]

The problem is you're using a centralized currency to pay for centralized electric to run a decentralized system.

It's a weakness.

At present the system has a lot of weaknesses. There is no bitcoin economy in which a lot of goods get traded that independent of the central economy.

Electricity alone wouldn't help you anyway. Bitcoin depends on global internet access. If the intercontinental cables would be cut Bitcoin would probably be dead.
Full independence could take a decade.

Till then it's much better to focus on providing goods and services via Bitcoin that people actually want to buy.

[anderxander]

Having the underwater cables cut vs. overcoming the problems that caused other digital currencies to fail are two different things.

Not doing anything about these weaknesses and letting them go is what makes projects like this fail.

If bitcoin did not have to pay for it's electricity, it would have a major advantage over previous digital currencies. The sun, wind, and water flowing, would be running it. Not oil secured through war and shipped back or some other finite controllable resource like natural gas or coal.

It's a strategic separation.

Bitcoin's value rests on the whole underlying system of dollars, which it seeks to replace, to function, in order for it to pay for its electricity.