Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[Norway]

WTF is going on? Who has time for all this trolling?

Lambie is probably paid to do it.

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[JorgeStolfi]

Can you imagine a design of cryptocurrency that would be to your liking, or is the concept as a whole damned to failure in your mind?

Tough question. There are several "features" of bitcoin that seemed good ideas at the time; but now, in hindsight, they seem to be mistakes, and Satoshi himself would probably agree.

One of them is the expectation of huge increases in value, resulting from the fixed cap and the assumption that it would replace other means of payment.  That turned bitcoin into an allegedly safe and lucrative investment, and a speculation tool.  Most of the big problems that bitcoin is facing today are a consequence of that undue retargeting of the project.

So, one problem that would have to be fixed is making it unappealing to hoarders and speculators.  

Then the value of 1 coin would be determined by its use for e-payments, according to the money velocity equation.

Another problem is ensuring that its value stays in a bounded range, so that ordinary payments can be expressed without too many zeros before or after the point.  Say, between 0.01 and 10 USD.  In the first extreme case (about the value of 1 yen) one would not need decimal fractions, and do all accounting with integers. In the second extreme case, one could truncate after 3 decimals (i.e. use the "milly" as Americans use the penny).

A stable value would seem to attract hoarders and investors, but hopefully the two goals can be achieved with built-in demurrage (negative interest).  Namely, each UTXO loses value at (say) 2% per year, so you can spend only 0.98 BTC of that 1 BTC that you earned 1 year ago.  Those 0.02 BTC would implicitly go to the "Bitcoin Treasury" and would be redistributed as block rewards (so the block reward could remain constant forever while the total amount of coins in circulation would still be bounded.)  

Hopefully that negative interest would be enough to dissuade hoarders and speculators.  

However, in order to keep the value stable, the issuance (e.g. by block rewards) would have to be adjusted to the volume of payments and to the mean time between payments with the same coin. I have no idea how that could be done in a way that would resist manipulation by hackers (computational or financial).  It seems that another Satoshi would have to come out with another ingenious invention...

Another problem is the centralization of mining.  That could be fixed by keeping the block rewards too small to make mining into a profitable industrial activity.  But that may conflict with the need to put more coins in circulation as adoption grows.

Other problems are the centralization of all transactions of the world in one blockchain.  That design limits the scalability of the network and makes nodes expensive to operate.  That could be fixed perhaps by having a large number of separate blockchains, each containing the transactions of a certain subset of (say) 1000 addresses.  Then a 1-in, 1-out transaction would have to be recorded in only two of these small blockchains.

Other technical problems include rewarding all players (not just miners), ensuring that every transaction gets processed, replacing the UTXO-based accounting to the balance-based accounting that banks use, etc.

There are also non-technical problems like anonymity, non-reversibility, lost coins, legal jurisdiction, ... but each would be a long discussion in itself...

[Hunyadi]

WTF is going on? Who has time for all this trolling?

Lambie is probably paid to do it.

Yes, it's starting to look like that is probable.

[noobtrader]

Can you imagine a design of cryptocurrency that would be to your liking, or is the concept as a whole damned to failure in your mind?

....
A stable value would seem to attract hoarders and investors, but hopefully the two goals can be achieved with built-in demurrage (negative interest).  Namely, each UTXO loses value at (say) 2% per year, so you can spend only 0.98 BTC of that 1 BTC that you earned 1 year ago.  Those 0.02 BTC would implicitly go to the "Bitcoin Treasury" and would be redistributed as block rewards (so the block reward could remain constant forever while the total amount of coins in circulation would still be bounded.)  

Hopefully that negative interest would be enough to dissuade hoarders and speculators.  
.....

ok, so you want to reward only the miner but tax the coin holder ? then who will buy and hold this coin ? if no one buy the coin who want mine this coin.... ? i dont get it ?

[JorgeStolfi]

There actually IS an "internal" value inside every bitcoin and it's the amount of resources (computers/miners/electricity) to build its block. As time goes by, the aforementioned "value" will rise because the difficulty to build one will be greater and the block reward will be halved.

By that argument, anything that required lots of resources to build, and cannot be easily replicated, should be worth as much as those resources, and gain value with time.  But there are many obvious counter-examples to this claim.  There are many old abandoned buildings that cost millions to build, may cost even more to build today, but now have negative value -- namely, the land is worth less with them on it than without them.

you fail to understand what would it take for somebody to use something as a currency. The keyword is "trust".

I know that quite well. (It is one of the two two only things that I managed to learn in my Economics course in grad school.) But trust is not physical, it is a state of mind.  Physically, you could in theory change the mind of all 1 million bitcoin holders, so that they would lose their trust and taste of bitcoin, with a rather modest expenditure of energy -- much less than what you need today to mine one bitcoin.  The difficult part, in practice, is getting that energy applied to the right synapses in their brains...

(The right words and images could perhaps do the trick; but trolling is still not a science, just a crude art...  )

[Norway]

Feels good to remove the weed from the garden. Everybody should make a habit of reporting Lambie to the moderator. The system works!  

Back to bitcoin:
Can we stay in this range, 220-300, for another eight months?

[ChartBuddy]

Coin
Explanation

[ElectricMucus]

Truly wonder -after the latest newbie image ban on the forum- when will Theymos will implement my other proposal... In a way, I'm happy this continues. Maybe we're moving towards much better things regarding NSFW & trolling posts...

I suppose you want to spend 2 hours every day reading the newbie jail...

[JorgeStolfi]

You really don't know much about economics, do you Professor?

I confess that most of what I know I learned in the last 2 years, watching bitcoin demonstrate all the basic principles as a universal counter-example. 

Bitcoin price is fueled by speculative investors. These people are forward thinking. They don't buy BTC based on current utility value, but implied future utility value. Just as stocks are valued by implied (and discounted) future rate of returns, we are betting that these cryptographic token thingies will become (more) useful down the road.

No disagreement about that.

Basically we are paying for the right to write on a very secure immutable ledger in the future.

OK, one can look at bitcoins that way.

(However, the word "right" is meaningless if there is no entity that will assist you in realizing those rights.  No one will come to your help if the miners tomorrow decide to refuse your transactions, for instance.  But OK, I suppose that you intend "right" as "capability", namely you get private keys that, miners willing, will let  you move your bitcoins.)

ANY inflation beyond the baked-in block reward means that the ledger will get diluted and polluted with extra data to a degree that we hitherto didn't factor in.

That does not follow. Even with perpetual inflation, the ledger would still be immutable, and would work in exactly the same way.  Your right to write on it would be preserved, and you could exchange that right with others for money or services, just as you do today.  The only difference between that hypothetical inflationary ledger, and what you today think that the ledger ought to be, would be that the coin rewards do not go to zero, but remain above some value. 

Also, there is the slippery slope of if we can increase by 1% after so many assurances that it would NEVER happen, you have to add the uncertainty that this inflation rate may be adjusted higher in the future.  

Indeed, but the "slippery slope" argument is notoriously ineffective in preventing changes. 

Promises by some group of people that "we will never change our decision X" are totally meaningless: if one day a majority of those people gets convinced that X was a bad decision, that same majority will conclude that the promise to never change X was a bad decision, too -- and then go ahead and change X.

I have seen that happen many time in the administrative Boards that I had to sit in the university.  Once in a while someone will propose that the Board votes to not debate issue X again -- forever, or before N years.  Sometimes Common Sense will have left the room for a cup of coffee, and such motion will get approved -- only for the issue to be reopened two months later, due to "unforeseen curcumstances"...

[Norway]

I wonder if we will see any black eyes on the scaling conference in Montreal tomorrow  

[JayJuanGee]

Can you imagine a design of cryptocurrency that would be to your liking, or is the concept as a whole damned to failure in your mind?

Tough question. There are several "features" of bitcoin that seemed good ideas at the time; but now, in hindsight, they seem to be mistakes, and Satoshi himself would probably agree.

One of them is the expectation of huge increases in value, resulting from the fixed cap and the assumption that it would replace other means of payment.  That turned bitcoin into an allegedly safe and lucrative investment, and a speculation tool.  Most of the big problems that bitcoin is facing today are a consequence of that undue retargeting of the project.

So, one problem that would have to be fixed is making it unappealing to hoarders and speculators.  

Then the value of 1 coin would be determined by its use for e-payments, according to the money velocity equation.

Another problem is ensuring that its value stays in a bounded range, so that ordinary payments can be expressed without too many zeros before or after the point.  Say, between 0.01 and 10 USD.  In the first extreme case (about the value of 1 yen) one would not need decimal fractions, and do all accounting with integers. In the second extreme case, one could truncate after 3 decimals (i.e. use the "milly" as Americans use the penny).

A stable value would seem to attract hoarders and investors, but hopefully the two goals can be achieved with built-in demurrage (negative interest).  Namely, each UTXO loses value at (say) 2% per year, so you can spend only 0.98 BTC of that 1 BTC that you earned 1 year ago.  Those 0.02 BTC would implicitly go to the "Bitcoin Treasury" and would be redistributed as block rewards (so the block reward could remain constant forever while the total amount of coins in circulation would still be bounded.)  

Hopefully that negative interest would be enough to dissuade hoarders and speculators.  

However, in order to keep the value stable, the issuance (e.g. by block rewards) would have to be adjusted to the volume of payments and to the mean time between payments with the same coin. I have no idea how that could be done in a way that would resist manipulation by hackers (computational or financial).  It seems that another Satoshi would have to come out with another ingenious invention...

Another problem is the centralization of mining.  That could be fixed by keeping the block rewards too small to make mining into a profitable industrial activity.  But that may conflict with the need to put more coins in circulation as adoption grows.

Other problems are the centralization of all transactions of the world in one blockchain.  That design limits the scalability of the network and makes nodes expensive to operate.  That could be fixed perhaps by having a large number of separate blockchains, each containing the transactions of a certain subset of (say) 1000 addresses.  Then a 1-in, 1-out transaction would have to be recorded in only two of these small blockchains.

Other technical problems include rewarding all players (not just miners), ensuring that every transaction gets processed, replacing the UTXO-based accounting to the balance-based accounting that banks use, etc.

There are also non-technical problems like anonymity, non-reversibility, lost coins, legal jurisdiction, ... but each would be a long discussion in itself...

Interesting to see Stolfi outline various proposed solutions based on alleged flaws in bitcoin....  and his suggestion that Satoshi would agree...    Wat da fuck?

These are all weak as fuck arguments coming from Stolfi regarding bitcoin "problems," and the supposed solutions seem unnecessary. 

In fact, many of the problems that he describes are in fact features and NOT bugs, and through increased adoption and development of the bitcoin infrastructure, many of these alleged shortcomings will be addressed or rectified with market reaction.

For example, a claim that there needs to be a built in approximate 2% inflation (or devaluation) is preposterous because it supposedly addresses a non-existing problem, at least at this time.

At this point, there is about about a 12% per year inflation in coins, which in essence decreases the value of existing coins by that amount, unless there is sufficient adoption to absorbed those additional coins.  Yes, over time, this amount is going to decrease, yet as time goes on, there will likely be more and more adoption.  Possibly, it could be necessary to consider value and expansion and possibly to allow for the production of more than 21million coins - but that seems to be a problem that is very speculative and way into the future (even if it exists at all).. and such a problem, may be addressable 50 to 100 years down the road to come up with a solution that may allow for the mining of additional coins, if that were necessary.

[JayJuanGee]

Feels good to remove the weed from the garden. Everybody should make a habit of reporting Lambie to the moderator. The system works!  

Back to bitcoin:
Can we stay in this range, 220-300, for another eight months?

Why?  would that actually be good for bitcoin?  I know that us HODLERS can acquire more BTC during that time; however, would that really be good for bitcoin?

It seems that Bitcoin needs to be at a price that is at least twice the current value to be practical for a lot of big user cases, and really the bitcoin infrastructure has been built quite a lot in the last 2 years, so accordingly, the bitcoin infrastructure could sustain a price of $1000 per BTC for an extended period of time to bring a little more practicality ... however, I kind of understand your point, that the $220 to $300 range does allow BTC to keep a bit of a lower profile, while continuing to be developed.... which could be a bit better to absorb mass adoption a little bit better, when mass adoption likely becomes more and more of an occurrence in bitcoinlandia.

[hdbuck]

In fact, many of the problems that he describes are in fact features and NOT bugs

lol much progress mr jay.

giving the lesson at this old trollfi. ^^

[kromtar]

Bear orgasm 

The funny thing is they are broke because they cant predict the future so always end buying high and selling low, come on guys dont tell me you always win.   

[hdbuck]

Coin
Explanation

nice try to panic people, you almost had me

[JorgeStolfi]

Are tickets for it really $1500? If they really cost that much then the scammers here would make more money organizing conferences than creating shitcoin IPOs.

No joke there.  Until some 20 years ago, technical conferences used to be organized by reputable scientific societies, and the organizers "played to lose": they looked for the cheapest possible venues and formats, and begged money from sponsors, so that the registration fee could be as low as possible.  Often the conference ended in the red, and sponsors had to be begged again to make ends meet.

But in those 20 years things have changed.  First there were many entrepreneurs ("Nagib Callaos" is a legendary name there) who saw technical conferences as an opportunity to make money.  They would organize humongous conferences, with dozens of parallel sessions, high fees, in popular vacation places; and accept absolutely any garbage that was printed in eight US letter pages and had a title and authors at the top.  They made a profit serving the huge market of mediocre university profs who needed publications in their resumés but cold not get their papers accepted into the serious conferences.

For a few years, serious conferences would still try to keep registration fees down; but then the sponsoring societies realized that they too could use the conferences as a source of revenue, instead of a service that was part of their mission.  IEEE was one of the first to do that (some IEEE top guy even resigned in protest), but others followed.  So, the fees that used to be 150-300 USD are now 1000-2000 USD...

[Norway]

Feels good to remove the weed from the garden. Everybody should make a habit of reporting Lambie to the moderator. The system works!  

Back to bitcoin:
Can we stay in this range, 220-300, for another eight months?

Why?  would that actually be good for bitcoin?  I know that us HODLERS can acquire more BTC during that time; however, would that really be good for bitcoin?

It seems that Bitcoin needs to be at a price that is at least twice the current value to be practical for a lot of big user cases, and really the bitcoin infrastructure has been built quite a lot in the last 2 years, so accordingly, the bitcoin infrastructure could sustain a price of $1000 per BTC for an extended period of time to bring a little more practicality ... however, I kind of understand your point, that the $220 to $300 range does allow BTC to keep a bit of a lower profile, while continuing to be developed.... which could be a bit better to absorb mass adoption a little bit better, when mass adoption likely becomes more and more of an occurrence in bitcoinlandia.

He he, I don't WANT the price to stay in this range for eight more months. In fact, I want it to go to moon as soon as possible. But I have sympathy with guys who need a few more months to accumulate. Been doing that myself for one and a half year.

At the same time, I think it's interesting to see that bitcoin beats most fiat currencies as a store of value the last eight months. (In 2014, it was the worst currency, lol!)

The thing is: I don't think bitcoin can stay in this range for eight more months. And it will certainly not go to zero, like prof. Bitcorn & prof. Stolfi believe  

[ChartBuddy]

Coin
Explanation

[klondike_bar]

Tough question. There are several "features" of bitcoin that seemed good ideas at the time; but now, in hindsight, they seem to be mistakes, and Satoshi himself would probably agree.

So, one problem that would have to be fixed is making it unappealing to hoarders and speculators.  

so make it a bad investment?

Then the value of 1 coin would be determined by its use for e-payments, according to the money velocity equation.

thats basically how it works now. people buy bitcoin for that the market feels it is worth. economics 101

Another problem is ensuring that its value stays in a bounded range, so that ordinary payments can be expressed without too many zeros before or after the point.  Say, between 0.01 and 10 USD.  In the first extreme case (about the value of 1 yen) one would not need decimal fractions, and do all accounting with integers. In the second extreme case, one could truncate after 3 decimals (i.e. use the "milly" as Americans use the penny).

do you mean to keep the value low such that people dont need to use "mBTC/uBTC/satoshis/etc"? Most bitcoin software allows you to send payment in mBTC or $USD (converted to BTC value). having decimals is not a bad thing, and if that is a problem for some people even when thier wallet software does the 'mBTC/satoshi' conversion its an issue of ignorance.

A stable value would seem to attract hoarders and investors, but hopefully the two goals can be achieved with built-in demurrage (negative interest).  Namely, each UTXO loses value at (say) 2% per year, so you can spend only 0.98 BTC of that 1 BTC that you earned 1 year ago.  Those 0.02 BTC would implicitly go to the "Bitcoin Treasury" and would be redistributed as block rewards (so the block reward could remain constant forever while the total amount of coins in circulation would still be bounded.)  

you already pay fees like this via transaction fees and via the network currently inflating at ~12% (dropping to 6% next year). The concept of 'inactivity fees' is sheer insanity and does nothing but make miners rich like bankers.

Hopefully that negative interest would be enough to dissuade hoarders and speculators.  

again, you talk about making bitcoin unappealing so that it is not desirable as a store of value, why?

Another problem is the centralization of mining.  That could be fixed by keeping the block rewards too small to make mining into a profitable industrial activity.  But that may conflict with the need to put more coins in circulation as adoption grows.

when block rewards are low, bitcoin becomes MORE centralised, because only those with cheap power can profit. home users are squeezed out by residential power rates and you're left with only datacenters that get power for <$0.05/kwh. your 'solution' would serve to drastically centralize the network by pushing out the small-scale miners

There are also non-technical problems like anonymity, non-reversibility, lost coins, legal jurisdiction, ... but each would be a long discussion in itself...

anonymitity is a problem? or is the problem that anonymity only goes as far as methods used by the user (such as mixing)
non-reversibility is a fundamental concept of bitcoin. As is the ability to lose coins (or rather, being unable to forcibly remove coins from an address you don't control).


with respect, many of your ideas to improve bitcoin fundamentally damage its functionality and value

[JayJuanGee]

In fact, many of the problems that he describes are in fact features and NOT bugs

lol much progress mr jay.

giving the lesson at this old trollfi. ^^

I thought that you were ignoring me....