mobodick (OP)
|
|
April 25, 2013, 05:17:12 PM |
|
My prediction is that in the future the price will be relatively stable, so the cost per block will be determined by the transaction fees. Essentially, we (the bitcoin users) will set how much energy is used by setting our transaction fee amounts.
If this will be the situation (and i agree this is likely) then i think that bitcoin will become too expensive to use as a regular currency. If i want to buy a bottle of milk chances are the transaction fees will be more then the milk or the transaction will take a very long time. Both would make bitcoin unworkable as a currency for daily use. It would require a cheaper bitcoin frontend to make small transactions economic.
|
|
|
|
Peter Lambert
|
|
April 25, 2013, 05:24:42 PM |
|
My prediction is that in the future the price will be relatively stable, so the cost per block will be determined by the transaction fees. Essentially, we (the bitcoin users) will set how much energy is used by setting our transaction fee amounts.
If this will be the situation (and i agree this is likely) then i think that bitcoin will become too expensive to use as a regular currency. If i want to buy a bottle of milk chances are the transaction fees will be more then the milk or the transaction will take a very long time. Both would make bitcoin unworkable as a currency for daily use. It would require a cheaper bitcoin frontend to make small transactions economic. And this is why I think people predicting ubiquitous use of bitcoins for everything are full of baloney. Bitcoins were from the beginning designed to be more of a reserve currency than an instant payment option. If you want to pay your friend 0.1 mB to cover the cost of a beer, then it is better to use Ripple or some other system than to actually send the tiny amount through the block chain.
|
Use CoinBR to trade bitcoin stocks: CoinBR.comThe best place for betting with bitcoin: BitBet.us
|
|
|
mobodick (OP)
|
|
April 25, 2013, 05:36:53 PM |
|
It costs you very little energy to carry cash or a bank card. Bitcoin requires multiple computers and a whole lot of actual computation to even do one transaction. It is much more expensive energy wise than any other form of common currency.
Uh... How do you think your credit card works? [Hint: It requires multiple computers and a whole lot of actual computation to even do one transaction.] I'm pretty sure it doesn't work by sending every person that has that type of credit card a receipt of every single transaction happening with those cards. Also, i'm pretty sure credit card companies don't need to mine their credits before they become usefull entities in the system. And finally, i'm also pretty sure that any calculations the cc comapny makes does not involve brute force solving a cryptographic puzzle. It would make credit cards prohibitively expensive. [Hint: way ahead of you.] You're right. Those credits are "mined" through the entirety of the operation of the tiered monetary system, from Fed operations, to U.S. Treasury markets, all the way down. And the entirety of the world's military might and legal infrastructure to secure that system. (edit) [Hint: you are surrounded.] I realize that. But that does not in any way justify a new currency that uses even more energy. Besides, the military operations are not to protect any particular form of currency. They are there to protect the value the currency represents. It is irrelevant what the storage medium is. I can predict that if any big entity will use bitcoin they will protect their wallet with the same fierceness. [Hint:Surrounded? A walk in the park ] That is all well and good, but perhaps my point was a little too obscure. Beyond a certain threshold you have to make a choice about how your limited resources are utilized.
Bitcoin is a line in the tar sands. But of course! I would even suggest that we need to make these kinds of choices before the treshold is reached. So we need to think very carefully if bitcoin, in its current incarnation, will be able to justify the resource it will require to operate in the future. I think this is essential to if bitcoin is to be of any significance in the future.
|
|
|
|
mobodick (OP)
|
|
April 25, 2013, 05:46:02 PM |
|
My prediction is that in the future the price will be relatively stable, so the cost per block will be determined by the transaction fees. Essentially, we (the bitcoin users) will set how much energy is used by setting our transaction fee amounts.
If this will be the situation (and i agree this is likely) then i think that bitcoin will become too expensive to use as a regular currency. If i want to buy a bottle of milk chances are the transaction fees will be more then the milk or the transaction will take a very long time. Both would make bitcoin unworkable as a currency for daily use. It would require a cheaper bitcoin frontend to make small transactions economic. And this is why I think people predicting ubiquitous use of bitcoins for everything are full of baloney. Bitcoins were from the beginning designed to be more of a reserve currency than an instant payment option. If you want to pay your friend 0.1 mB to cover the cost of a beer, then it is better to use Ripple or some other system than to actually send the tiny amount through the block chain. Well, Bitcoin.org is kindof disagreeing with you: An open source P2P digital currency
Bitcoin is a digital currency, a protocol, and a software that enables
Instant peer-to-peer transactions Worldwide payments Low or zero processing fees And much more!
This seems to be very much marketed as an instant payment option. I agree that this is not quite how it turns out to work, but it is how bitcoin is promoted.
|
|
|
|
Jackin Jill
Member
Offline
Activity: 61
Merit: 10
Don't try to look tough Dollface
|
|
April 25, 2013, 09:50:53 PM |
|
Then how are you able to honestly say that btc uses more energy than any other currency?
That's completely BS. Look at all those countries that have gotten rid of small denominations in their currencies because they are not cost effective to continue to implement. Jeez, how did we ever go from copper, silver and gold to paper?
Can you think for even a moment in how much time, and money goes into just planning and designing paper money? The transportation and green house gases that are emitted just to truck that heavy crap around?
You can't honestly be serious with this analysis... Can you?
It's not bullshit at all. All currency has a cost. You can't compare bitcoin to paper money because bitcoin is not in use like paper money. The fact that some countries get rid of the smaller denominations is completely unrelated to the cost of bitcoin. Moreover, bitcoin does't have denominations of value. It is a broken comparison, whatever you may have wanted to tell with it. Another reason why you can't compare fiat to bitcoin is the mechanics of making it work. Money is re-usable while bitcoins are not. Planning and designing paper money is something you do once (or once in a while). After that you can use the design as many times as you like. The main costs of paper money are in the accounting and the energy of transporting it, not in its design or production. To print a single dollar note of any value costs less than $0.1 After the printing the note can be used may times. But you have the cars that are transporting them from place to place every day. But even then the transportation costs for these bulk transfers are fractions of percents of the total value transported so its still not much, relatively. Compare that to bitcoin. In bitcoin you have to pay every time you transfer value. Right now the client asks for 0.01 bitcoin which is about $1.56 per transaction. And then you still need to wait some time before the transaction happens. So this is already quite a barrier for use as a currency and this is only the beginning. And that is besides the fact that there are miners pissing away heaps of energy just to make it all work. The $1.56 doesn't actually cover the network because the fees are nothing compared to the block rewards. In other words, in the future when all income would need to come from fees the $1.56 will not be nearly enough to cover the costs of miners. I think someone figured that mining a block of 25 bitcoin costs about $40 worth of energy at the moment. That's about 1% of its current dollar value. You could argue that a single bitcoin will be worth much more in the future and then the production costs will be relatively smaller. But this is not true. Bitcoin value follows hashing power. The more energy expended the higher the price goes. So to make bitcoin more valuable we first need to expend more energy on mining. Think about these things and expand them to a substantial part of our economy and you may start to see my point. I'm almost certain that if you spent as much time analyzing regular fiat currencies, you'd have answered all your questions by now. I guess my Harvard economics education was a complete waste of time and money. I'm just here trolling on semantics. yea, that's right. I'm that bored with my life.
|
|
|
|
myrkul
|
|
April 25, 2013, 10:20:32 PM |
|
I'm just here trolling on semantics. yea, that's right. I'm that bored with my life. There are people here that are. [Hint: you've been talking to one]
|
|
|
|
mobodick (OP)
|
|
April 26, 2013, 04:41:02 AM |
|
I'm almost certain that if you spent as much time analyzing regular fiat currencies, you'd have answered all your questions by now. I guess my Harvard economics education was a complete waste of time and money. I'm just here trolling on semantics. yea, that's right. I'm that bored with my life. What is wrong with my observations about bitcoin? I mean, you took the time to read some posts here, so maybe you really are that bored.
|
|
|
|
Adrian-x
Legendary
Offline
Activity: 1372
Merit: 1000
|
|
April 27, 2013, 11:30:00 PM |
|
But of course! I would even suggest that we need to make these kinds of choices before the treshold is reached. So we need to think very carefully if bitcoin, in its current incarnation, will be able to justify the resource it will require to operate in the future. I think this is essential to if bitcoin is to be of any significance in the future.
I can think of a few scenarios using Bitcoin and having it utilise vast amounts of energy, and whereby distributing it effectively and utilising the latent heat and capitalising on the distributed energy consumption we have a net benefit, or secondly having concentrated mining facility converting the latent heat in a seconds tear energy economy of heat mining. All these new opportunities are only viable, if energy consumption of energy in the Bitcoin network can become "unsustanable" by your definition today. As a result I don't see any motive to over plan, over planning would only be depriving the future of the opportunities we make for them today. In a sustainable eco system waste is food for another system, (nuclear power being the one exception) and by all means I would agree with you if we just stopped at waste and called it done. As an engaged ecological and environmental designer, I've observed the waste we create today is not part of a sustainable ecosystem, (it could be argued it is but only over devastating cycles over long periods of time) but for the typical time periods from generation to generation it is in fact just waste, and a result of our economic system, when cryptos supersede fiat and gold, we will start to see a huge transformation. I would predict we will become vastly more efficient. Here I find chodpaba idea that money is just a means of exchange with the pulpous of redistribute risk, quite refreshing and appropriate.
|
Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
|
|
|
mobodick (OP)
|
|
April 28, 2013, 06:23:20 PM |
|
But of course! I would even suggest that we need to make these kinds of choices before the treshold is reached. So we need to think very carefully if bitcoin, in its current incarnation, will be able to justify the resource it will require to operate in the future. I think this is essential to if bitcoin is to be of any significance in the future.
I can think of a few scenarios using Bitcoin and having it utilise vast amounts of energy, and whereby distributing it effectively and utilising the latent heat and capitalising on the distributed energy consumption we have a net benefit, or secondly having concentrated mining facility converting the latent heat in a seconds tear energy economy of heat mining. All these new opportunities are only viable, if energy consumption of energy in the Bitcoin network can become "unsustanable" by your definition today. As a result I don't see any motive to over plan, over planning would only be depriving the future of the opportunities we make for them today. In a sustainable eco system waste is food for another system, (nuclear power being the one exception) and by all means I would agree with you if we just stopped at waste and called it done. As an engaged ecological and environmental designer, I've observed the waste we create today is not part of a sustainable ecosystem, (it could be argued it is but only over devastating cycles over long periods of time) but for the typical time periods from generation to generation it is in fact just waste, and a result of our economic system, when cryptos supersede fiat and gold, we will start to see a huge transformation. I would predict we will become vastly more efficient. Here I find chodpaba idea that money is just a means of exchange with the pulpous of redistribute risk, quite refreshing and appropriate. Interesting observations!
|
|
|
|
wrenchmonkey
|
|
April 28, 2013, 07:26:19 PM |
|
It costs you very little energy to carry cash or a bank card. Bitcoin requires multiple computers and a whole lot of actual computation to even do one transaction. It is much more expensive energy wise than any other form of common currency.
Uh... How do you think your credit card works? [Hint: It requires multiple computers and a whole lot of actual computation to even do one transaction.] I'm pretty sure it doesn't work by sending every person that has that type of credit card a receipt of every single transaction happening with those cards. Also, i'm pretty sure credit card companies don't need to mine their credits before they become usefull entities in the system. And finally, i'm also pretty sure that any calculations the cc comapny makes does not involve brute force solving a cryptographic puzzle. It would make credit cards prohibitively expensive. [Hint: way ahead of you.] You're right. Those credits are "mined" through the entirety of the operation of the tiered monetary system, from Fed operations, to U.S. Treasury markets, all the way down. And the entirety of the world's military might and legal infrastructure to secure that system. (edit) [Hint: you are surrounded.] I realize that. But that does not in any way justify a new currency that uses even more energy. Besides, the military operations are not to protect any particular form of currency. They are there to protect the value the currency represents. It is irrelevant what the storage medium is. I can predict that if any big entity will use bitcoin they will protect their wallet with the same fierceness. [Hint:Surrounded? A walk in the park ] True, but it does require a whole lot of buildings with a whole lot of people in them, needing a whole lot of air conditioning. And because there's no "receipt" sent to the entire network, they instead have to rely on several layers of security, and just HOPE somebody doesn't figure out a way to gain access to those computers, and drain every account. Sending a couple of bits of information to the entire network for each transaction isn't particularly data-heavy, when you realize that it eliminates the need for additional security hardware, software, engineers, analysts, consultants, etc, etc. Not to mention the amount of energy that is consumed by other computers that are dedicated to trying to hack into those systems. Or the regulatory bodies, etc, etc, that are dedicated to making sure that the banks don't just up and run off with all that centralized 'cash'... You're not looking at total cost, for the system. You're trying to isolate one portion (the transaction portion) and pretend all the rest doesn't really actually matter...
|
|
|
|
mobodick (OP)
|
|
April 28, 2013, 08:42:23 PM |
|
You're not looking at total cost, for the system. You're trying to isolate one portion (the transaction portion) and pretend all the rest doesn't really actually matter...
No, i just want to keep things apart as much as possible. Mining costs are not transaction costs.
|
|
|
|
myrkul
|
|
April 28, 2013, 08:44:19 PM |
|
You're not looking at total cost, for the system. You're trying to isolate one portion (the transaction portion) and pretend all the rest doesn't really actually matter...
No, i just want to keep things apart as much as possible. Mining costs are not transaction costs. I'm sorry, maybe I misunderstood somewhere, but doesn't mining confirm the transactions?
|
|
|
|
mobodick (OP)
|
|
April 28, 2013, 08:51:40 PM |
|
You're not looking at total cost, for the system. You're trying to isolate one portion (the transaction portion) and pretend all the rest doesn't really actually matter...
No, i just want to keep things apart as much as possible. Mining costs are not transaction costs. I'm sorry, maybe I misunderstood somewhere, but doesn't mining confirm the transactions? Yes, but the ammount of confirmed transactions is unrelated to the hashing power.
|
|
|
|
myrkul
|
|
April 28, 2013, 09:04:58 PM |
|
You're not looking at total cost, for the system. You're trying to isolate one portion (the transaction portion) and pretend all the rest doesn't really actually matter...
No, i just want to keep things apart as much as possible. Mining costs are not transaction costs. I'm sorry, maybe I misunderstood somewhere, but doesn't mining confirm the transactions? Yes, but the ammount of confirmed transactions is unrelated to the hashing power. That's limited by block size, correct? And block size is also unrelated to hashing power? Or does a larger block take longer to hash?
|
|
|
|
mobodick (OP)
|
|
April 29, 2013, 12:18:04 AM |
|
You're not looking at total cost, for the system. You're trying to isolate one portion (the transaction portion) and pretend all the rest doesn't really actually matter...
No, i just want to keep things apart as much as possible. Mining costs are not transaction costs. I'm sorry, maybe I misunderstood somewhere, but doesn't mining confirm the transactions? Yes, but the ammount of confirmed transactions is unrelated to the hashing power. That is not entirely true. The number and volume of transactions is a measure of velocity, which affects the prevailing exchange rate, which ultimately drives difficulty. So, it does not happen immediately but transactions do eventually translate to hashing power. The feedback loop is inherent to the design. Difficulty follows hashing power pretty tightly as far as i can see. So i don't think that difficulty is driven by transactions. Anyway, isn't difficulty supposed to keep the number of blocks found constant despite hashrate?
|
|
|
|
wrenchmonkey
|
|
April 29, 2013, 01:16:27 AM |
|
You're not looking at total cost, for the system. You're trying to isolate one portion (the transaction portion) and pretend all the rest doesn't really actually matter...
No, i just want to keep things apart as much as possible. Mining costs are not transaction costs. Mining costs ARE transaction costs. Transactions and mining costs are inseparable. And once the system reaches maturity, mining costs will ONLY be transaction costs (since there's nothing else to "mine". You can't say that the transaction costs is all that matters on the traditional banking side, but that the entire system costs matters on the Bitcoin side. You have to compare apples to apples. Either compare transaction costs only, or compare complete costs (infrastructure and transactions together). Since you can't separate transactions from infrastructure (on either side, honestly), looking at 'total cost' is the only apples to apples comparison that can be made... Comparing traditional banking as a 'transactions only' issue, to the complete infrastructure of Bitcoin just skews the discussion, and isn't an honest way of addressing it.
|
|
|
|
myrkul
|
|
April 29, 2013, 01:18:10 AM |
|
It is driven by the decision of node operators to add or subtract hashing power. Ultimately, this decision is driven by the prevailing sentiment of node operators of an expectation of profit. Price leads difficulty.
So hash power follows price, difficulty follows hash power, and transaction volume follows... ?
|
|
|
|
firefop
|
|
April 29, 2013, 01:50:16 AM |
|
It is driven by the decision of node operators to add or subtract hashing power. Ultimately, this decision is driven by the prevailing sentiment of node operators of an expectation of profit. Price leads difficulty.
So hash power follows price, difficulty follows hash power, and transaction volume follows... ? ... adoption rates? Not strictly speaking, but I'm sure it's a large factor.
|
|
|
|
myrkul
|
|
April 29, 2013, 01:53:20 AM |
|
But the vast majority of trading never touches the blockchain until cash-out. it's all just handing stuff back and forth in the exchange's servers.
Yes, all of that applies to trade volume, but not necessarily transaction volume.
|
|
|
|
myrkul
|
|
April 29, 2013, 02:09:24 AM |
|
But the vast majority of trading never touches the blockchain until cash-out. it's all just handing stuff back and forth in the exchange's servers.
Yes, all of that applies to trade volume, but not necessarily transaction volume.
Take a look at unique addresses created. You will find that as volatility increases there are more addresses created as people move BTC in and out of the exchanges. Hmm. Good point. Volatility will increase transaction volume, but there's a baseline, for actual buying and selling. How low do you think that is? (Also: this should go in your sig:) In short, the peaks are Austrian, the troughs are Keynesian.
|
|
|
|
|