ETH = Game Over

[JayJuanGee]

Yes, that could be the key to your own myopic focus on this bullshit "freedom" crap of a lot of nut job libertarians who like to knock down a variety of existing systems and to suggest that they have not opted for them or consented to such, and therefore, they want to criticize without really providing any kind of realistic solutions. 

Hahaha these "bullshit libertarians" will be laughting at you when your bank account will get a 80% bail-in. Make sure you post a picture here crying after your bank account is emptied so that we "nutjobs" can laugh.

You can identify all you like with the libertarian nut jobs, yet you seem to be attempting to attribute too much to me in terms of what protections and actions that I am taking on a personal level.  In other words, you seem to be getting defensive merely because I characterized some libertarians as "nut jobs."

See there is the reason for bitcoin's existence, it's not libertarian nonsense, it's common sense. Bank accounts can get seized any minute, while bitcoin cant.

What the fuck are you talking about?  Yeah, there are a lot of folks in bitcoin for a variety of reasons and some of them happen to fall in various places on the libertarian scale.  In other words, you seem to be attributing some kind of strawman argument to me in order that you can rebut it.  I never made any such argument to suggest that banks were better than bitcoin, blah blah blah

Yet you and your troll buddy keep trashing bitcoin here, but you will be glad that you own some bitcoin when the big financial collapse comes, because pretty much anything else could be wiped out.

Sure, I don't expect you to necessarily read or to understand my lengthy responses; however, apparently, you got so caught up in your nonsensical attempts to equate my position and dinofelis that you failed to recognize that there has been considerable substantive differences between what each of us has been saying.

[LiberOptions]

Ethereum Price Technical Analysis – ETH is Forming Base?

Ethereum price broke down further as sellers remained in action. There was a break below the $11.60 support area for a move towards $11.50. Once again a new weekly low was formed at $11.46. The price was seen correcting higher yesterday, but it found sellers near $12.10. I was correct when I called for a test of the 1.618 extension of the last swing from the $11.84 low to $12.28 high. The price not only tested it, but also broke it for a new low...

Link

[dinofelis]

You are not saying bitcoin hasnt got any value but it has only 5% of the value , well that is almost nothing according to you.

It seems that there really are people here that when one points out a potential problem with bitcoin *as well* as with other altcoins, that they suffer from some dissonance. 

I only say that if the price of an asset is mainly made up by demand by people hoping for a price rise, that one is in the schoolbook example of "greater fool theory", and that an inevitable speculative bubble is (being) formed - that's an undeniable fact.

Now, I'm pointing out that most of bitcoin's (and altcoin's) market cap is indeed, made up of demand coming from people "hoping for a price rise".  The 95% is a ballpark estimate of this, it could be 80% or 99%, it is a matter of speaking, and apparently JJG kind of agreed with that number.

My "attack" was not so much against bitcoin particular, but people have to realize that if the main drive for demand (and hence price, and hence market cap) for an asset is *hope for price rise* then there is a serious risk that one is in a speculative bubble, to say it mildly.  Whenever a speculative bubble arises, there is always group think that denies this, and that talks about "paradigm shift" and the like.  Like the "new economy" in the dot-com bubble.

I also pointed out that one cannot really "invest" in a crypto currency, but only GAMBLE on it, if one doesn't *use* it.  A crypto currency is invented to be used, and its usage is "store of value".  In the short term, that's called a "currency", and in the longer term, a "store of value" (like gold).  But one doesn't "invest" in a store of value, one only STORES value in it.  The USAGE of the monetary asset is its "value proposition": the fact that one can use it as a currency (to earn it and to spend it), or the fact that one can store value in it.  This usage can open possibilities (of earning and spending, or of longer term value storage) that *didn't exist before* and that's the true economic production of value such a crypto currency has.

For instance, buying stuff on dark markets is something that is difficult to do with VISA, and a crypto currency opens that possibility. Or doing small transactions to the other side of the world.  Or this, or that.  All those usage cases where a crypto currency opens a new possibility that didn't exist before, or that did cost much more before or that was much riskier before, or that took longer before, is the economic value production of that crypto currency.  It is what I call "the competitive edge it brings".

This is production of value, when one uses crypto in an economic activity that brings value.  But apart from that, just "investing" in crypto to hope for its rise, is just *participating in a zero sum game*.  So all "investors" are nothing else but gamblers that win as much as one of their peers looses.   Their "investment" doesn't increase any value production of the crypto currency in the economy.  Whether they hold their stash and buy more of it or not, doesn't increase the competitive edge the crypto currency can bring (on the contrary).

This, in contrast to an investor in company stock, where the investment is used to buy more production capital.  If you buy new stock issued by a company, you are giving money to that company that it will use to acquire production capital and bring it more competitive edge.  If you buy and hold bitcoin, eth, .... , then nothing improves economically somewhere for a *user* of that crypto (on the contrary).

But what about the other 95%, it's being used by gambling, investment, trading and other stuff.

You can stop at "gambling".  Indeed.

Yes I wish bitcoin were more widely used in other areas, but we just need to wait with that, Rome wasnt built in 1 day, and no corporation is helping us to go mainstram, only our small entrepreneurs are doing things here and the rest of the people just complain constantly.

It depends what you call "go mainstream".  If that is "bitcoin will be used in general as a currency/store of value WITHOUT an expectation of its price rise as its main drive" then yes.   I agree with you, but this is not what we are witnessing over the last years.  I have the impression that bitcoin is, after these years, still (or even more) driven by "expecting a higher price" and not by "usage".   I pointed out that it is very well possible that one day that will come, but also, that this will be hampered by exactly the consequences of the way too high price right now.

too much cost in mining

So what, at least it's a competitive market with cutting edge mining equipments constantly. You have solar panels to generate electricity, what more can you ask for?

Mining is the price of the system (I fully agree that it is necessary, but it is a necessary evil).  The higher the price of the system, the lower the competitive edge it can bring.  So the minimal amount of mining that "works" would be optimal.  That amount of mining is directly proportional to the price.  It could hence be 20 times less if all those gamblers hadn't blown up the price of bitcoin 20-fold over its necessary value to be used as a store of value.

That's not nothing: 20 times less cost of production !  This is why I say that this speculation harms the usage.

too much attention by regulators

haha those pesky bureocrats have noses like sharks, they would regulate regardless of what happens here, there is little to do if you have a hammer and everything you see around you is a nail.

I seriously doubt that regulators would look so hard at it if its market cap where smaller and banks wouldn't be looking at it, but maybe you're right there.

You need a fucking 50,000$ license to open a lemonade stand (harmless), so yeah every shit is regulated because they are powerhungry control freaks, so bitcoin will get regulated either way, so that is a weak argument made by you.

The whole thing is that bitcoin's main value proposition is that you can in principle do such now without banking, and hence without licence (yes, totally illegal).  Once you've paid your licence, and once you're paying your taxes, what point is there to use anything else but a normal bank ?  Bitcoin is exactly bringing economic value there where you have to be outside of the legal system.

Better allies than foes, i personally like the fact that banks adopt blockchain technology, it shows that bitcoin wont be targeted for shutdown,but may actually end up a preferable asset that banks might buy into later. I am not a big fan of big banks, but you have to admit that its better to have them allies than foes, so this is a good thing in my opinion.

The point is that of course, if banks use it, it will be totally regulated, and its use in illegal affairs, which is the main value it can bring, is then in any case dead.

Doesnt matter ,that was in 2013, bitcoin since then has undergone in massive changes, both in infrastructure as in market, with many many merchants and a better stability.

I think we went through a period of stability because speculation had diminished.  But with the halving and all the BS that was told around it, it is back in full force. 

[RealBitcoin]

This is production of value, when one uses crypto in an economic activity that brings value.  But apart from that, just "investing" in crypto to hope for its rise, is just *participating in a zero sum game*.  So all "investors" are nothing else but gamblers that win as much as one of their peers looses.   Their "investment" doesn't increase any value production of the crypto currency in the economy.  Whether they hold their stash and buy more of it or not, doesn't increase the competitive edge the crypto currency can bring (on the contrary).

This, in contrast to an investor in company stock, where the investment is used to buy more production capital.  If you buy new stock issued by a company, you are giving money to that company that it will use to acquire production capital and bring it more competitive edge.  If you buy and hold bitcoin, eth, .... , then nothing improves economically somewhere for a *user* of that crypto (on the contrary).

How can you say this so sure, have you even looked at the bitcoin economy? THere are 250,000 merchants you know, and new innovations come out daily.

Investing in bitcoin is not gambling (unless you gamble with it afterwards), but those who hold it, actually help grow the economy of bitcoin.

It is essentially like investing in a company, but this company is global and decentralized. A price of bitcoin of 1$ doesnt bring high IQ PHD's to work here, but a price of 600$ surely does.

✔ Bitcoin has advanced cryptography
✔ Bitcoin has created and efficientizes blockchain
✔ Bitcoin is creating frictionless global transactions / without capital control interference
✔ Bitcoin has a very robust decentralized mining network
✔ Bitcoin has created a new industry mining, but also indirectly contributes to microchip research
✔ Bitcoin is advancing the field of computer programming ,security research (including money security), and computer science massively (not to mention the hardware research)!
✔ Bitcoin's blockchain can help tons of sciences: biology, math, physics, etc by distributing heavy calculations globally for a fee
✔ Bitcoin is growing an alternative economy (not just gambling) but things like Openbazaar
✔ Bitcoin can create a decentralized Forex and Crypto market with Bitsquare
AND MUCH MORE...


So it's not speculation, bitcoin is the founding block of the alternative economy and the basis of it, so as things will be built on it, directly with sidechains in the future, bitcoin will be the center of all internet economy in the future.

It would be like investing in Google in the early days, but like 100000x better and bigger.

Mining is the price of the system (I fully agree that it is necessary, but it is a necessary evil).  The higher the price of the system, the lower the competitive edge it can bring.  So the minimal amount of mining that "works" would be optimal.  That amount of mining is directly proportional to the price.  It could hence be 20 times less if all those gamblers hadn't blown up the price of bitcoin 20-fold over its necessary value to be used as a store of value.

That's not nothing: 20 times less cost of production !  This is why I say that this speculation harms the usage.

A small mining market with GPU and CPU is not good, its inneficient, provides less security, and less throughput, you cannot have a bitcoin of today with only miners of 2012, it wont work.

Mining is good as it is today, efficient, and it would be like this either way, as market forces force people to make things efficient.

I seriously doubt that regulators would look so hard at it if its market cap where smaller and banks wouldn't be looking at it, but maybe you're right there.

No you are wrong, regulators put their noses everywhere, regardless of dangers to customers and investors and things like that. If a harmless lemonade stand is so overregulated, then it shows you that they dont care about your safety, they just want more power.

The whole thing is that bitcoin's main value proposition is that you can in principle do such now without banking, and hence without licence (yes, totally illegal).  Once you've paid your licence, and once you're paying your taxes, what point is there to use anything else but a normal bank ?  Bitcoin is exactly bringing economic value there where you have to be outside of the legal system.

Because after you paid your license, and after you paid your taxes, you still have to pay a huge fucking comission to the banks. Why not skip the latter part, legally, if you have the option?

I dont know where you live but here banks easily charge you 5-10% comission on every business transaction. Why would you not want to skip that? Give bitcoin's yearly ROI, the volatility doesnt even matter, instead of paying a 10% extra fee, you could make a 50% profit by holding BTC.

Once you have good exchange points like Bitpay and others, it would be very foolish to not use this opportunity.

The point is that of course, if banks use it, it will be totally regulated, and its use in illegal affairs, which is the main value it can bring, is then in any case dead.

Banks do way more shady things than any bitcoiner could imagine, i hardly doubt that.

I think we went through a period of stability because speculation had diminished.  But with the halving and all the BS that was told around it, it is back in full force. 

You use the word "speculation" in a so negative manner, but i bet you dont even know what it means. All bitcoin holders are essentially speculators, i am not even sure what you think the word means.

There is nothing wrong with speculations, you are a speculator when you buy a bag of potatoes because you dont know ahead if half of them will be rotten by the time you eat it.

The price is more stable now because it's more liquidity (Gemini exchange, Bitpay , Localbitcoins at all time highs, etc..). With more liquidity the market is harder to manipulate, therefore it's more efficient and fair.

[dinofelis]

How can you say this so sure, have you even looked at the bitcoin economy? THere are 250,000 merchants you know, and new innovations come out daily.

Maybe.  But if you look at Fisher's formula, and if you assume that the time between acquiring a bitcoin (by earning it, buying it on an exchange, mining it....) and spending it at one of these merchants' places is, say, two weeks (like the average holding time of a monthly salary is, say), then a coin goes around 25 times a year.   So a market cap of $ 1 billion would correspond to a yearly turn-over of $ 25 billion worth of merchandise bought with bitcoin.  I have serious doubts that these 250 000 merchants each have a bitcoin-related turn-over of $ 100 000,- each.  I don't think that the use of bitcoin corresponds to a world market with a yearly turn-over of $25 billion.

And if that were the case, we would only have 10% of the current market cap.  If bitcoin's market cap today were used entirely in the above way, one would have a $250 billion yearly turnover bought with bitcoin.  I simply don't believe that.  I even don't believe that it is $25 billion.

This is my whole point: the real currency usage of bitcoin is minuscule as compared to its actual market cap.  Not implying that bitcoin has no usage, but that its market cap is huge.

It is essentially like investing in a company, but this company is global and decentralized. A price of bitcoin of 1$ doesnt bring high IQ PHD's to work here, but a price of 600$ surely does.

Absolutely not.  That is exactly my point.  Whether bitcoin is at $1, $10, or $10 000 doesn't change ziltch to its value if the amount of usage as a currency is the same.

✔ Bitcoin has advanced cryptography
✔ Bitcoin has created and efficientizes blockchain
✔ Bitcoin is creating frictionless global transactions / without capital control interference
✔ Bitcoin has a very robust decentralized mining network

All this is marketcap independent, and is already over and done.  The capital control will rather be induced more when the market cap rises.

✔ Bitcoin has created a new industry mining, but also indirectly contributes to microchip research

That's actually its biggest failure.  The idea was that individual nodes would mine, not that this would become an oligarchy of a handful of industrial miners.

✔ Bitcoin is advancing the field of computer programming ,security research (including money security), and computer science massively (not to mention the hardware research)!
✔ Bitcoin's blockchain can help tons of sciences: biology, math, physics, etc by distributing heavy calculations globally for a fee
✔ Bitcoin is growing an alternative economy (not just gambling) but things like Openbazaar

All this is related to its use as a currency, not to the 95% of speculative market cap.

✔ Bitcoin can create a decentralized Forex and Crypto market with Bitsquare
AND MUCH MORE...

Again independent of its market cap (as long as it isn't meant as a financial gambling toy).

So it's not speculation, bitcoin is the founding block of the alternative economy and the basis of it, so as things will be built on it, directly with sidechains in the future, bitcoin will be the center of all internet economy in the future.

That "base" is for the moment about 1/20 of the market cap of bitcoin.  

A small mining market with GPU and CPU is not good, its inneficient, provides less security, and less throughput, you cannot have a bitcoin of today with only miners of 2012, it wont work.

On the contrary.  That's the best form of mining one can have.  The reason why one cannot have bitcoin today with the mining tech of 2012, is simply because the market cap is too high, which makes for too much seigniorage which has to burn, and the emission rate which is ill-defined in bitcoin.

I dont know where you live but here banks easily charge you 5-10% comission on every business transaction. Why would you not want to skip that? Give bitcoin's yearly ROI, the volatility doesnt even matter, instead of paying a 10% extra fee, you could make a 50% profit by holding BTC.

Wow.  10%.  My bank only takes 2%.  That's peanuts as compared to the taxes and social duties I pay, which amount to about 50%.  If I handle legally, it costs me 50% with normal banking, and, say, 48% using bitcoin, but including the volatility risk, you see the point.  There isn't any for using bitcoin when doing legal business.  For me, it wouldn't change a thing.

You use the word "speculation" in a so negative manner, but i bet you dont even know what it means. All bitcoin holders are essentially speculators, i am not even sure what you think the word means.

Speculation is the act of acquiring an asset with the sole aim of selling it at a higher value, right ?

That's not what a monetary asset is for.

There is nothing wrong with speculations, you are a speculator when you buy a bag of potatoes because you dont know ahead if half of them will be rotten by the time you eat it.

Buying potatoes to eat them is not speculation.  Speculation is the act of acquiring an asset with the *sole* (or main) motivation of selling it for a higher value.  Speculation is not "taking economic risk".  Every economic act contains economic risk.

Investing is the act of acquiring directly or indirectly production capital with the aim of obtaining a reward for the produced value with that capital.

There's NOTHING in bitcoin that improves when its market cap increases by the act of speculation.  The market cap of bitcoin is a (necessary) nuisance.  The lower it is, the better.  But a monetary asset can simply not exist without SOME market cap, due to Fisher's formula.  But the lower it is, for a given usage, the better. Especially if its cost of usage is proportional to its market cap.  If the market cap has to rise because of increased usage, then that rise in market cap, although in itself something evil, is a signature of more usage, which is good.  But that's about it.

[micher143]

i think ethereum is losing its shine now...etherium pays much bigger in the last month and because of the hacking i thinks its value is lowering and losing its shine.....
lets trade at caution......

[RealBitcoin]

Maybe.  But if you look at Fisher's formula, and if you assume that the time between acquiring a bitcoin (by earning it, buying it on an exchange, mining it....) and spending it at one of these merchants' places is, say, two weeks (like the average holding time of a monthly salary is, say), then a coin goes around 25 times a year.   So a market cap of $ 1 billion would correspond to a yearly turn-over of $ 25 billion worth of merchandise bought with bitcoin.  I have serious doubts that these 250 000 merchants each have a bitcoin-related turn-over of $ 100 000,- each.  I don't think that the use of bitcoin corresponds to a world market with a yearly turn-over of $25 billion.

And if that were the case, we would only have 10% of the current market cap.  If bitcoin's market cap today were used entirely in the above way, one would have a $250 billion yearly turnover bought with bitcoin.  I simply don't believe that.  I even don't believe that it is $25 billion.

This is my whole point: the real currency usage of bitcoin is minuscule as compared to its actual market cap.  Not implying that bitcoin has no usage, but that its market cap is huge.

Stocks have usually a P/E ration of 20x, with all this moneyprinting it's more like 50x, and nobody complains.

Bitcoin is good as it is, it has anticipated future value built in it, nothing wrong with this.

Absolutely not.  That is exactly my point.  Whether bitcoin is at $1, $10, or $10 000 doesn't change ziltch to its value if the amount of usage as a currency is the same.

No, it you check the forum nr of new users, and the google searches, it always goes up when the price goes up.

So the higher price, the more users. Calculate it yourself.

All this is marketcap independent, and is already over and done.  The capital control will rather be induced more when the market cap rises.

No because savings create capital ,and capital is required for investments into research. Economy 101.

If bitcoin goes up 100%, more capital is available for researchers.

That's actually its biggest failure.  The idea was that individual nodes would mine, not that this would become an oligarchy of a handful of industrial miners.

This is debatable.

All this is related to its use as a currency, not to the 95% of speculative market cap.

Which is highly correlated ,so price does matter.

Again independent of its market cap (as long as it isn't meant as a financial gambling toy).

You seem to have no idea how markets work and why they are useful to society. It's not a "gambling toy" it helps a lot of people if they can frictionelssly transfer money.

Remittances
Poor people transacting
etc...

That "base" is for the moment about 1/20 of the market cap of bitcoin. 

Stocks have a good P/E ratio of 20x so this is perfect.

Wow.  10%.  My bank only takes 2%.  That's peanuts as compared to the taxes and social duties I pay, which amount to about 50%.  If I handle legally, it costs me 50% with normal banking, and, say, 48% using bitcoin, but including the volatility risk, you see the point.  There isn't any for using bitcoin when doing legal business.  For me, it wouldn't change a thing.

Good for you, I am sure the 3.5 billion people who are also extorted by banks in Africa and other places with huge comissions and capital controls don't agree with you.

Bitcoin is primarly for them, that is why you see a surge from Kenya and SE Asia.

Speculation is the act of acquiring an asset with the sole aim of selling it at a higher value, right ?

That's not what a monetary asset is for.

Yes, but by holding it, it gives capital to the other users who might want to use it for research purposes.

If a cancer research does a crowdfund and gets 10,000 BTC, well if the price in the meantime goes up 50%, all the better.

Buying potatoes to eat them is not speculation.  Speculation is the act of acquiring an asset with the *sole* (or main) motivation of selling it for a higher value.  Speculation is not "taking economic risk".  Every economic act contains economic risk.

Investing is the act of acquiring directly or indirectly production capital with the aim of obtaining a reward for the produced value with that capital.

There's NOTHING in bitcoin that improves when its market cap increases by the act of speculation.  The market cap of bitcoin is a (necessary) nuisance.  The lower it is, the better.  But a monetary asset can simply not exist without SOME market cap, due to Fisher's formula.  But the lower it is, for a given usage, the better. Especially if its cost of usage is proportional to its market cap.  If the market cap has to rise because of increased usage, then that rise in market cap, although in itself something evil, is a signature of more usage, which is good.  But that's about it.

Bitcoin is made of of many independent projects, and with the implementation of sidechains, this will be more clear.

Each project does it's thing ,and in the end it increases the value of BTC collectively.

What is the worth of the USD? It's just a paper, but it represents a 18 TRILLION $ economy , with different economic activities taking place in it, each giving value to the USD.

You seem to have a hard time understanding the difference between an asset and a currency.




Besides there is 1 more important thing why Bitcoin is crucial.

Cyber Warfare

The fact that all major banks get hacked constantly, should concern you, so far nobody hacked BTC, and I hardly thing it will be succesful. It's a global currency and it's the best there is.

[xuan87]

i think ethereum is losing its shine now...etherium pays much bigger in the last month and because of the hacking i thinks its value is lowering and losing its shine.....
lets trade at caution......

yeah etherum is in deep trouble after the incidents, ethereum lost most of it's user, they somehow don't believe in their security anymore, we can just see what will the next step etehreum developer do, to be honest ethereum is quite a good alts it's such a shame if we have to lost this coin

[dinofelis]

Stocks have usually a P/E ration of 20x, with all this moneyprinting it's more like 50x, and nobody complains.

That has nothing to do with it.  The P/E ratio gives you the price of the capital over the YEARLY value production.  If your company is going to last for more than 20 years, the price is even less than the value it is going to produce over its existence.

The value a *currency* produces is only the competitive edge it brings over the use of other currencies, in one way or another.  That is an infinitesimal fraction of the volume.  If I can do a deal with bitcoin for a value worth, say, $100 000,- and by doing it with bitcoin, and not with a bank transfer or VISA or whatever, I can win, say, $100 in costs, then the produced value of bitcoin in this transaction is $100.  Not $100 000,-.  This is like the value produced by a truck: it is, after deduction of all its costs, the competitive edge using the truck has brought me over using, say, a train, because the costs are lower, I can reach a customer that I couldn't reach with the train, I can help my customer faster than the competition that uses a train, ...  This competitive edge is only a small fraction of the value the truck transports.

A currency is like a truck: it transports value.  But the produced value of a currency is not the value it transports, but only the small edge it can bring over other ways to transport value.

No, it you check the forum nr of new users, and the google searches, it always goes up when the price goes up.

Sure, but that is only "greater fool" stuff.  That isn't the value that bitcoin produces.  The value bitcoin produces is the little edge it brings in those transports of value that you can better do with bitcoin, at lower cost, faster,.... than with other means of transporting value, such as the fiat system.

So the higher price, the more users. Calculate it yourself.

Most of them are not users but gamblers.

No because savings create capital ,and capital is required for investments into research. Economy 101.

But a stash of bitcoin held by someone doesn't buy capital goods.  Savings create capital if they are used to buy capital goods.  There's a difference between holding and investing: economy 101 too.

If bitcoin goes up 100%, more capital is available for researchers.

Of course not.  How does someone doing research on bitcoin obtain capital goods when bitcoin goes up, because the coins are held more tightly by speculators ?  Nobody's buying capital goods anywhere.

You seem to have no idea how markets work and why they are useful to society. It's not a "gambling toy" it helps a lot of people if they can frictionelssly transfer money.

I perfectly agree with you, but speculating on bitcoin is not transferring money frictionlessly, on the contrary, it increases friction: because of the higher volatility (risk is higher, which has to be hedged), and mining is more expensive (which is paid for by inflation and fees).

Remittances
Poor people transacting
etc...

That is exactly the value of bitcoin, and it is that which is NOT most of its usage or market cap.  It is exactly that what is harmed by too high a market cap.

Stocks have a good P/E ratio of 20x so this is perfect.

These two concepts have nothing to do with each other.   The P/E ratio of stock is the price of the asset "for eternity" as compared to the yearly PRODUCTION of value.  If you hold the share for 20 years, you will have, with no growth, paid back the price of the asset.  So a P/E ratio of 20 just means that you expect the company to exist for 20 years (I'm oversimplifying: one should use discounted cash flow of course).

https://en.wikipedia.org/wiki/Discounted_cash_flow

On the other hand, the ratio of speculation over fundamental value (Fisher) is just the inflation of the speculative bubble over the true value of the asset.

If you want to compare it to stock, it would be rather like the following: the sum of all the assets of a company is X, and the sum of all its shares is 20 X.

A company that is "worth" (if you would sell all of its assets), say, $10 million would have a market capitalisation of $200 million.  Everybody would claim that its stock is way, way overpriced and is in a full speculative bubble - or that they are on something and that their actual assets will soon rise to $200 million by the exceptional inventions that they are doing.

Yes, but by holding it, it gives capital to the other users who might want to use it for research purposes.

That is bluntly not true.  Holding assets doesn't invest them.

Read this:

http://moneyfortherestofus.net/mny060-hoarding-investing/

If a cancer research does a crowdfund and gets 10,000 BTC, well if the price in the meantime goes up 50%, all the better.

Hahaha, that's of course funny.  You are simply suggesting that cancer reseachers join you in the greater fool theory game, and hope for more greater fools that will buy enough bitcoin at higher prices still so that they can make a benefit.  You are suggesting that they become greater fools that will find still greater fools. 

What is the worth of the USD? It's just a paper, but it represents a 18 TRILLION $ economy , with different economic activities taking place in it, each giving value to the USD.

What gives value to the US dollar is Fisher's formula, and its use as a currency.  The same thing that gives about $30 of value to bitcoin.

If people were now hoping on "increased adoption" of the dollar, and its value increase, so that they would pile up hoards and hoards of dollar bills, such that the dollar rose a twenty-fold in value, with people hoarding more and more of it, because its value increased (because of that demand), that would be an extremely unhealthy situation for the dollar.  Its value would be much more volatile, it would suffer a very speculative bubble, and it would of course, at a certain point, come crashing down when it wouldn't increase any more, and all people that were only holding piles of dollars hoping for it to increase, would start spending them because they lost hope in still a lot of increase, which was their main motive to hold it it the first place. 

You'd have the dollar come crashing down.

[LiberOptions]

Ethereum Price Technical Analysis – ETH Another Breakout Attempt

Ethereum price fell yesterday back towards the $11.50 versus the US Dollar, but somehow buyers managed to protect the downside move. There was a nice upside move in ETH/USD, taking it above the 23.6% Fib retracement level of the last drop from the $12.22 high to $11.46 low. It was a positive sign, which encouraged the buyers to take the price above the 100 hourly simple moving average...

Link

[JayJuanGee]

Buying potatoes to eat them is not speculation.  Speculation is the act of acquiring an asset with the *sole* (or main) motivation of selling it for a higher value.  Speculation is not "taking economic risk".  Every economic act contains economic risk.

Investing is the act of acquiring directly or indirectly production capital with the aim of obtaining a reward for the produced value with that capital.

There's NOTHING in bitcoin that improves when its market cap increases by the act of speculation.  The market cap of bitcoin is a (necessary) nuisance.  The lower it is, the better.  But a monetary asset can simply not exist without SOME market cap, due to Fisher's formula.  But the lower it is, for a given usage, the better. Especially if its cost of usage is proportional to its market cap.  If the market cap has to rise because of increased usage, then that rise in market cap, although in itself something evil, is a signature of more usage, which is good.  But that's about it.

Bitcoin is made of of many independent projects, and with the implementation of sidechains, this will be more clear.

Each project does it's thing ,and in the end it increases the value of BTC collectively.

What is the worth of the USD? It's just a paper, but it represents a 18 TRILLION $ economy , with different economic activities taking place in it, each giving value to the USD.

You seem to have a hard time understanding the difference between an asset and a currency.

One interesting thing about bitcoin is that a lot of us have come to rethink these categories and differentiations between assets and currencies.

Bitcoin is both an asset and currency, and various fiats can also serve as both assets and currencies.  There is a matter of degree of adoption and use, and there is a question of factors that affect it in such a way that it is either likely to lose its value, retain its value or appreciate in value.

The actual and true decentralization of bitcoin (to the extent that it can be retained) is likely to bring a whole new level of understanding of scarcity and deflationary in regards to the increasing supply.  Surely, people still have some impact over the governance and direction of bitcoin, so it will be quite interesting to witness whether digital scarcity (of thew 21 million remains), or whether traditional banking factors are going to be allowed into bitcoin to such an extent that fractional reserves screw up its scarcity or whether people are going to be smart enough to identify a real and meaningful appreciation for either actually personally controlling the bitcoins that they own or having a meaningful way to assure and/or insure that their coins are not being diluted by fractional reserve practices.

[JayJuanGee]

Remittances
Poor people transacting
etc...

That is exactly the value of bitcoin, and it is that which is NOT most of its usage or market cap.  It is exactly that what is harmed by too high a market cap.

Strange dinofelis that you cannot even recognize the lunacy of your own logic.... not only your lunacy in this point, but nearly all your points are full of selective and non-factual speculative bullshit.

First:  Why does it matter to poor people about the price of bitcoin if they are using it to transmit value?  you buy and then you sell.. The only matter is the cost of the transaction.  The same is true if they chose to hold the bitcoin, it does not matter how much it costs, it only matters if it goes up in value from the point after they bought it.  Have you ever heard of buying a fraction of a bitcoin.

Second:  regarding your lame-ass nonsense about market cap, I am not the only person here attempting to get this into your apparently thick skull.  If market cap goes up, then volatility is likely to go down, one of the very things that you seem to be complaining about.

 

[dinofelis]

First:  Why does it matter to poor people about the price of bitcoin if they are using it to transmit value?

Because the higher the speculative part of the price, the higher the volatility, and the higher the mining cost of the network, and hence the cost of using it.  If the cost of using it (volatility risk plus using cost) increases, this eats away the competitive edge that bitcoin can bring over other means of payment, and hence diminishes the incentive to adoption for genuine usage.

Second:  regarding your lame-ass nonsense about market cap, I am not the only person here attempting to get this into your apparently thick skull.  If market cap goes up, then volatility is likely to go down, one of the very things that you seem to be complaining about.

Absolutely not, if it is speculative.  I'm all with you if market cap goes up because of currency usage, because that gives it a solid demand which has higher and higher inertia.  The criteria to pick one currency over another for competitive edge reasons are usually not very variable, so that demand shouldn't fluctuate much.  However, speculative demand varies A LOT as a function of rumours, technical analysis and price fluctuations inducing beliefs in rise and fall.  So the higher the speculative part of an asset, the higher the volatility.   The frequency spectrum of that volatility depends, however on the temporary expectations of the speculators, so it isn't necessarily high-frequency volatility.

But an asset that has in three years time, come down a factor of 6 and rose again a factor 3 in a year's time, is not exactly something with low volatility.  

For a currency, price going up is just as much a problem as price going down.  If I agree with you that you do a job for 20 bitcoin the next 2 months, and in 2 months, bitcoin has doubled, then the price I have to pay you is twice what I had in mind when we made the agreement.  If I have to hedge that by buying right now the coins that I will pay to you in 2 months, then I have to immobilize that money, which is not exactly something that will give it a competitive edge to use it over another way of payment.  It might be that I didn't earn them yet and was coun Of course, you, on the receiving side, will be happy, but essentially, this has put a lot of uncertainty in the use of bitcoin in an agreement, making it a less attractive means of payment than fiat if fiat can be used.

[dinofelis]

.

[JayJuanGee]

First:  Why does it matter to poor people about the price of bitcoin if they are using it to transmit value?

Because the higher the speculative part of the price, the higher the volatility, and the higher the mining cost of the network, and hence the cost of using it.  If the cost of using it (volatility risk plus using cost) increases, this eats away the competitive edge that bitcoin can bring over other means of payment, and hence diminishes the incentive to adoption for genuine usage.

You continue to seem to work backwards in your logic to arrive at the conclusions that you want in spite of actual facts and logic.

The only thing that makes any kind of sense in your above response is the speculative possibility that fees could go up based on potential increased costs, yet that speculation remains quite speculative and even defies logic to conclude that if more people use something the more it is going to cost.. when in actuality there tends to be a kind of economy of scale that takes place with increased adoption... hello?

Second:  regarding your lame-ass nonsense about market cap, I am not the only person here attempting to get this into your apparently thick skull.  If market cap goes up, then volatility is likely to go down, one of the very things that you seem to be complaining about.

Absolutely not, if it is speculative.  I'm all with you if market cap goes up because of currency usage, because that gives it a solid demand which has higher and higher inertia.

Even though I conceded to the speculative possibility that bitcoin could currently be composed of 95% speculation, that still does not mean that we even agree about the utility of speculation that we have in fact gone back and forth about with my concern  that you seem to denigrate speculation too much, fail to give it any value and then assume that you somehow know what it is with such lack and denigrated value... brings you to ongoing nonsensical and ludicrous conclusions.

 The criteria to pick one currency over another for competitive edge reasons are usually not very variable, so that demand shouldn't fluctuate much.

You could be correct if they are equally available to a person and their cost is similar, but in the "REAL WORLD" this assumption does not tend to be the case.  Folks do not have options to equally chose between currencies or payment methods, so they engage in various utilitarian calculations regarding which to use based on availability.  I am not going to be inclined to attempt to spend a Ruble in the USA, but I may well get away with spending a dollar in Russia.  Similar calculations of availability, acceptance and cost can be done for almost any payment method... whether you call it a currency or an asset or you call it late for lunch.

 However, speculative demand varies A LOT as a function of rumours, technical analysis and price fluctuations inducing beliefs in rise and fall.  So the higher the speculative part of an asset, the higher the volatility.   The frequency spectrum of that volatility depends, however on the temporary expectations of the speculators, so it isn't necessarily high-frequency volatility.

yes, with your comparative contrast analysis, every once in a while you may tend to be correct, and that is likely that speculation tends to increase volatility.. but it does not mean that speculation should not exist or be minimized or to somehow wish it away... We roll with the punches in terms of how much speculation is taking place and in what direction and how much volatility is anticipated based on such current speculation dynamics that we may or may not recognize or understand.

But an asset that has in three years time, come down a factor of 6 and rose again a factor 3 in a year's time, is not exactly something with low volatility.  

Who fucking cares?  No one is suggesting that volatility does not exist, and only you seem to be suggesting that it is some evil that needs to be eliminated.  To the best that you can, you prepare for volatility and protect yourself, and you see how volatility likely changes with the passage of time, and different assets and currencies have differing levels of volatility and different factors that affect their volatility.

At this time, economic experts are all over the fucking place regarding how they are trying to figure out how to classify bitcoin and considering whether it is a new asset class or not.  Therefore, there is likely going to continue to be volatility in bitcoin that is in directions that are all over the place and beyond any person's ability to project exactly - even though most of the logic suggest that future bitcoin volatility is likely to continue to include upward valuations in unit price and market cap.

And, whether this bears repeating or not, volatility is likely to go down with increases in market cap because it takes much more capital to manipulate prices - yet since bitcoin seems to be so immature and potentially early in its adoption phase, there can be all kinds of future combinations of speculation versus utility that remains very difficult to pinpoint how much is what and how much utility is being provided merely by the fact that its market cap is going up and allowing for much less price slippage with larger transactions.

For a currency, price going up is just as much a problem as price going down.  

Get the fuck out of here with your ongoing lame attempt to continue to attempt to pigeon hole bitcoin as a currency.  Sure bitcoin has currency attributes and even a large number of folks aspire that bitcoin becomes a currency, but the fact of the matter remains that bitcoin's market cap puts bitcoin currently at the m1 rank of 77, and surely m1 money is only the most basic of the kinds of currencies compared with other means of storage, investment, value transfer vehicles.  In other words, bitcoin is way down the road from being considered as any kind of stable, non volatile and widely accepted form of currency... even though it has some of such attributes, already.

If I agree with you that you do a job for 20 bitcoin the next 2 months, and in 2 months, bitcoin has doubled, then the price I have to pay you is twice what I had in mind when we made the agreement.

Well, we are both dumb asses if we make such an agreement without protecting ourselves in some kind of way or making some kind of hedge.

 If I have to hedge that by buying right now the coins that I will pay to you in 2 months, then I have to immobilize that money, which is not exactly something that will give it a competitive edge to use it over another way of payment.  

Yeah, there are various ways to hedge, and you better have the 20 bitcoin's when it comes time to pay me, you fuck.... hahahahahaha... I say "you fuck" with endearment, because you have not failed or refused to pay, yet.  

It might be that I didn't earn them yet and was coun

I gotta be careful if I am entering into an agreement with someone who may not have the ability to pay, but with any venture, there can be a certain amount of risk, and questions concerning which of the parties should bear the risk (sometimes agreed upon beforehand, and other times, left quite ambiguous and maybe foreseeably yet ill-prepared-for becomes an issue after the fact).

Of course, you, on the receiving side, will be happy, but essentially, this has put a lot of uncertainty in the use of bitcoin in an agreement, making it a less attractive means of payment than fiat if fiat can be used.

It's neither more or less attractive as a means of payment if the parties take adequate precautions and have a decent understanding for what they are in for.  

On the other hand, if the parties do not sufficiently understand the risks then it becomes much more stressful and more difficult to prepare for what you do not understand.  That's true with anything, and if some asset or currency has a longer track record, then expectations can be more predictable, maybe almost as certain as the sun coming up.

[dinofelis]

You continue to seem to work backwards in your logic to arrive at the conclusions that you want in spite of actual facts and logic.

If the logic works, then the way one arrives at it doesn't matter, does it.

The only thing that makes any kind of sense in your above response is the speculative possibility that fees could go up based on potential increased costs, yet that speculation remains quite speculative and even defies logic to conclude that if more people use something the more it is going to cost.. when in actuality there tends to be a kind of economy of scale that takes place with increased adoption... hello?

Look, there is a NET OUTFLOW of value from the bitcoin system, which is the cost of mining.  That's done on purpose: seigniorage has to be destroyed.   The higher the amount of seigniorage, the higher the amount of destroyed value from the bitcoin system. 

There is also value creation in the bitcoin system: the competitive edge people obtain by using bitcoin over other means of currency/store of value.  That competitive edge is essentially independent of the market cap, and hence of the value outflow.  I will make one exception: the competitive edge may increase somewhat because at higher value outflow, so at higher difficulty, the network is more secure ; however that higher technical security is offset by a higher incentive to attack it, so it is absolutely not certain that the real security of bitcoin increases (that is, that the probability that your transactions will be reversed, or that the network as a whole will entirely be corrupted decreases) if difficulty increases, with increasing market cap, and increasing incentive to attack.
So, one can conclude that the competitive edge that bitcoin's usage over the usage of other currencies/stores of value in a particular case can bring, is independent of market cap.  This "bringing of competitive edge" is the value creation of bitcoin in the economy.

The total value created by the bitcoin system is the competitive edge it brings for each transaction that is a genuine usage as a currency or a store of value, and is hence simply proportional to the amount of genuine usage, independent of market cap.

If the value destroyed by the bitcoin system is proportional to market cap, and the value created by it is independent of it, then one cannot conclude anything else but that the net value that bitcoin brings to the economy decreases with increasing market cap, no ?

However, the value it creates will increase with *genuine* adoption (that is, to use as a currency, or a store of value).

As such, we see that bitcoin's maximal value creation happens when all of its market cap is due to genuine adoption.  It is the minimal unavoidable market cap, given by Fisher's formula: a certain usage as store of value cannot avoid to cause a certain market cap.  THAT market cap is the point where bitcoin creates most value in the economy.

The higher the ratio of the actual market cap over the minimal necessary to sustain genuine usage, the lower the value the bitcoin system creates, and at a certain point, this can go negative.

In a formula:

U is genuine usage (amount of store of value, as a currency, or a longer term store of value)
S is speculative usage

M is total market cap: M = F x (U + S)  (F is a factor from Fisher's formula)

Created value is proportional to C = E x U, where E is the competitive edge that real usage of bitcoin brings over other systems.

Destroyed value by mining is D = m X M, where m is a factor that comes from mining.

Value balance of the bitcoin system: V = C - D = E x U - m x M = E x U - m x F x (U + S) = (E - m x F) x U - m x F x S

What we see is that, if the competitive edge bitcoin can bring to genuine usage, is larger than the market cap that that usage implies and the destruction of value by mining, so if E - m x F is positive, then bitcoin has the potential to create value (if that is negative, bitcoin is lossy in all cases, it has not sufficient edge to compensate for minimal mining).

We also see that the speculative part only decreases the value creation of the system.  In our case, S is 20 times higher than U, so this term could very well render bitcoin lossy.

That is my logical point.

[JayJuanGee]

You continue to seem to work backwards in your logic to arrive at the conclusions that you want in spite of actual facts and logic.

If the logic works, then the way one arrives at it doesn't matter, does it.

Now, that's pure retarded.  Did you even read what I wrote?  For example, if you are using bad facts, then it does not matter how pure is your logic.. and I am not even gonna concede that you have good logic, when you are asserting such nonsense.

The only thing that makes any kind of sense in your above response is the speculative possibility that fees could go up based on potential increased costs, yet that speculation remains quite speculative and even defies logic to conclude that if more people use something the more it is going to cost.. when in actuality there tends to be a kind of economy of scale that takes place with increased adoption... hello?

Look, there is a NET OUTFLOW of value from the bitcoin system, which is the cost of mining.  That's done on purpose: seigniorage has to be destroyed.   The higher the amount of seigniorage, the higher the amount of destroyed value from the bitcoin system. 

 More nonsense.. you definitely are not engaging with facts when it comes to understanding what proof of work is providing.

There is also value creation in the bitcoin system: the competitive edge people obtain by using bitcoin over other means of currency/store of value.  That competitive edge is essentially independent of the market cap, and hence of the value outflow.  I will make one exception: the competitive edge may increase somewhat because at higher value outflow, so at higher difficulty, the network is more secure ; however that higher technical security is offset by a higher incentive to attack it, so it is absolutely not certain that the real security of bitcoin increases (that is, that the probability that your transactions will be reversed, or that the network as a whole will entirely be corrupted decreases) if difficulty increases, with increasing market cap, and increasing incentive to attack.
So, one can conclude that the competitive edge that bitcoin's usage over the usage of other currencies/stores of value in a particular case can bring, is independent of market cap.  This "bringing of competitive edge" is the value creation of bitcoin in the economy.

The total value created by the bitcoin system is the competitive edge it brings for each transaction that is a genuine usage as a currency or a store of value, and is hence simply proportional to the amount of genuine usage, independent of market cap.

If the value destroyed by the bitcoin system is proportional to market cap, and the value created by it is independent of it, then one cannot conclude anything else but that the net value that bitcoin brings to the economy decreases with increasing market cap, no ?

However, the value it creates will increase with *genuine* adoption (that is, to use as a currency, or a store of value).

As such, we see that bitcoin's maximal value creation happens when all of its market cap is due to genuine adoption.  It is the minimal unavoidable market cap, given by Fisher's formula: a certain usage as store of value cannot avoid to cause a certain market cap.  THAT market cap is the point where bitcoin creates most value in the economy.

The higher the ratio of the actual market cap over the minimal necessary to sustain genuine usage, the lower the value the bitcoin system creates, and at a certain point, this can go negative.

In a formula:

U is genuine usage (amount of store of value, as a currency, or a longer term store of value)
S is speculative usage

M is total market cap: M = F x (U + S)  (F is a factor from Fisher's formula)

Created value is proportional to C = E x U, where E is the competitive edge that real usage of bitcoin brings over other systems.

Destroyed value by mining is D = m X M, where m is a factor that comes from mining.

Value balance of the bitcoin system: V = C - D = E x U - m x M = E x U - m x F x (U + S) = (E - m x F) x U - m x F x S

What we see is that, if the competitive edge bitcoin can bring to genuine usage, is larger than the market cap that that usage implies and the destruction of value by mining, so if E - m x F is positive, then bitcoin has the potential to create value (if that is negative, bitcoin is lossy in all cases, it has not sufficient edge to compensate for minimal mining).

We also see that the speculative part only decreases the value creation of the system.  In our case, S is 20 times higher than U, so this term could very well render bitcoin lossy.

That is my logical point.

Your logic points are nonsense, largely based on your inputting of faulty facts, and we have gone over this at nauseum.

[dinofelis]

Get the fuck out of here with your ongoing lame attempt to continue to attempt to pigeon hole bitcoin as a currency.  Sure bitcoin has currency attributes and even a large number of folks aspire that bitcoin becomes a currency, but the fact of the matter remains that bitcoin's market cap puts bitcoin currently at the m1 rank of 77, and surely m1 money is only the most basic of the kinds of currencies compared with other means of storage, investment, value transfer vehicles.

I always say "currency or longer-term store of value".  M0, M1, M2, MB and all other M-type asset classes are of this type.  They are *collectibles* functioning as *store of value*.  "currency" is just a word for "store of value in the short term".

 In other words, bitcoin is way down the road from being considered as any kind of stable, non volatile and widely accepted form of currency... even though it has some of such attributes, already.

And it doesn't have anything else, that's the whole point.  Its only value proposition is "store of value" (by definition, because it is a collectible without any cash flow or other contractual obligations linked to it).  It is like gold, silver, and dollars.  All of them stores of value, so "currencies" in the wide sense (that is, if you extend the hold times to longer than just between earning and spending on a regular basis, but for instance, to put value aside for a big expense later, or for retirement, or for one's children, like you would put gold aside).

Well, we are both dumb asses if we make such an agreement without protecting ourselves in some kind of way or making some kind of hedge.

So it is easier to make such a deal in fiat than in bitcoin, hence bitcoin has no competitive edge here.  Unless for one or another reason, we cannot do it in fiat (for instance, with a smart contract, or because it is illegal).  The value bitcoin has in this case over other systems is hence, most of the time, zero.

I gotta be careful if I am entering into an agreement with someone who may not have the ability to pay, but with any venture, there can be a certain amount of risk, and questions concerning which of the parties should bear the risk (sometimes agreed upon beforehand, and other times, left quite ambiguous and maybe foreseeably yet ill-prepared-for becomes an issue after the fact).

Sure, but these things are equal whether we take bitcoin or dollars as our means of payment.  It is only different if we use a smart contract.  If not, the risks are the same, but on top of that, with bitcoin, I have a volatility risk that is much lower with fiat.  So bitcoin has no edge, and is hence, as a value booster for the deal, totally useless.

It's neither more or less attractive as a means of payment if the parties take adequate precautions and have a decent understanding for what they are in for.  

It is less attractive, because a hedge against volatility is needed, which is much less the case, all else equal, for another payment system.  So if that volatility is too important, bitcoin loses entirely its value proposition as competitive edge over other payment methods.  Unless, as I said, I cannot use another method for one or another reason.  Then bitcoin has value, because without it the deal can't work.

Whether I will get paid or not is independent of the payment method, so it is not bringing in any competitive edge (unless I use a smart contract, to eliminate counterparty risk - THEN there is extra value to it).

[dinofelis]

Now, that's pure retarded.  Did you even read what I wrote?  For example, if you are using bad facts, then it does not matter how pure is your logic.. and I am not even gonna concede that you have good logic, when you are asserting such nonsense.

What bad facts ?

More nonsense.. you definitely are not engaging with facts when it comes to understanding what proof of work is providing.

Proof of work serves to make mutability difficult, and essentially serves to burn seigniorage, so that the currency creation doesn't bring much to the creator.   As seigniorage is in general seen as unfair, the burning of seigniorage makes bitcoin to be seen as a fair system, and hence can help create the belief system of its value (an openly scammy system has difficulties establishing a belief system of value).

Bitcoin economics is such that, apart for a small margin, competition between miners will destroy most of the created bitcoin value by PoW, and that's good, but at the same time, a huge waste, and a cost to the entire system, but which also provides for security of its ledger.

Your logic points are nonsense, largely based on your inputting of faulty facts, and we have gone over this at nauseum.

Just claiming that something is nonsense doesn't make it nonsense.

I divided the demand for bitcoin in two classes:
- the demand as a store of value (which would remain if bitcoin's price were known not to rise significantly in the future) which is the only sustainable demand a collectible can have - that store of value can be gold-like in the long term (call it M2, whatever), and store of value in the short term (currency).  The value of bitcoin as a store of value with a competitive edge over other stores of value is its economic contribution, and so its fundamental value.  This demand is independent of any consideration of future rise.
- the demand for it motivated mainly by the hopes for a price rise, which I call speculative, and which is the source of "greater fool theory".

I considered, that there is 20 times more demand motivated by the second reason than the first.  That is, if some god would come from the sky and let all potential bitcoin holders and buyers know that the price would remain essentially stable in the far future, I presume that demand and holding of bitcoin would drop a 20-fold today.  We more or less agreed on that (5% real usage, 95% in for "moon").

If you take these starting points, my conclusions cannot be avoided.

[Opquar]

Some more hard fork.

https://blog.ethereum.org/2016/10/13/announcement-imminent-hard-fork-eip150-gas-cost-changes/

Announcement of imminent hard fork for EIP150 gas cost changes

Posted by Martin Swende on October 13th, 2016.
During the last couple of weeks, the Ethereum network has been the target of a sustained attack. The attacker(s) have been very crafty in locating vulnerabilities in the client implementations as well as the protocol specification.

While the recent patches have led to an overall increased resiliency in the client implementations, the attacks have also demonstrated that a lower-level change to the EVM pricing model is needed.

For many users, the most visible consequence is probably that they are having difficulties getting transactions included in blocks, and full nodes are facing memory limitations in managing the bloated state.

This is our strategy to address these issues:

As a temporary measure to minimize the effects of the most recent attack, we recommend all miners to lower the gaslimit to 500K gas.
A hard-fork based on EIP 150 version 1c will be put into effect at block 2457000. This will reprice certain operations to correspond better to the underlying computational complexity.
A second hard-fork will follow shortly after, aimed at reverting the current “state-bloat” introduced by the attacks. This second fork will serve to remove accounts which are empty; lacking code, balance, storage and nonce == 0.
We have implemented the changes required in the clients and are currently extending and adding tests in an effort to prevent the introduction of consensus-breaking vulnerabilities.

And as a reminder, the Ethereum Bug Bounty is open and includes the new hardfork-implementations.