GROWING Total Network HashRate pushing BTC DOWN?

[frito]

It seems to me that with the recent skyrocketing total network hashrate has been also coming the slow sneaky depreciation of BTC value.

1. Miners are in for profit, In real currencies mostly. Therefore they sell immediately what they have mined. Pushing BTC down.

2. Mining of course increases number of BTC in circulation. Diluting its value. Hence sending BTC down.

What's your take on this partner?  

[cp1]

BTC creation rate is independent of hash rate (to a good approximation)

[Turbonoodle]

Praise the ever-increasing network difficulty rate!

https://blockchain.info/charts/total-bitcoins

[frito]

thx man. A good point.

Is the transaction fees paid to the miners also counted in the total approximate constant BTC creation?

Another argument:

Before ASIC miners, the BTC creation was much more democratic/spread among many people. Now the demographics has drastically changed; the BTC inflow is shifting towards the few asic owners and most importantly ASIC manufacturers, who are making vastly the most of BTC. It is not unlike the 99% vs the 1% rich paradigm. Hence influencing by their behaviour the asset in question(BTC) the most.

They(ASIC makers) are probably more greedy than the rest of us and they are not in for an investment or the believe in an un-centralized currency but for Profit (as any other company), the profit is measured in hard currency. Hence they are selling Majority of ALL mined BTC (IMHO).
(only few entities now create/mine the majority of BTC)

Before ASIC era many of small miners were seeing BTC as an investment or a hedge against real, deteriorating assets or legal tender(currencies); they were not selling everything they mined.

Just my theory....

[frito]

BTC creation rate is independent of hash rate (to a good approximation)

to a good approximation eh ? thats why the time between blocks is now half what it used to be..........

[Gladdy]

did ASIC deliver ? i know butterfly don

[DannyHamilton]

BTC creation rate is independent of hash rate (to a good approximation)

to a good approximation eh ? thats why the time between blocks is now half what it used to be..........

I think you are mistaken.

Averaged over the past 12 weeks or so (since July 1) the time between blocks appears to be approximately 7 minutes 45 seconds.

The network auto adjusts difficulty to try to keep the average time between blocks close to 10 minutes.

I don't think 7.75 is half of 10.

The extra 3,566 blocks that have been created released an extra 85,584 BTC into a system of 11,700,000 BTC.  This is an increase of 0.7% spread out over nearly 3 months.

[pontiacg5]

Sneaky depreciation? I don't see any such depreciation in the charts I look at.

"(only few entities now create/mine the majority of BTC)"

I also think you are wrong here. This chart shows that 3/4 of the hashrate come from pools, which I can only assume are mostly individuals mining not large operations.

"Is the transaction fees paid to the miners also counted in the total approximate constant BTC creation?"

Transaction fees are paid from coins already in existance. Money changing hands, not being created.

I think your theory is a little flawed...

[Methodise]

Hash rate is surely one of the major determinants of a crypto's market value.

The more the merrier, because the hash rate bolsters the network. Makes it nice and stable.

[frito]

BTC creation rate is independent of hash rate (to a good approximation)

to a good approximation eh ? thats why the time between blocks is now half what it used to be..........

I think you are mistaken.

Averaged over the past 12 weeks or so (since July 1) the time between blocks appears to be approximately 7 minutes 45 seconds.

The network auto adjusts difficulty to try to keep the average time between blocks close to 10 minutes.

I don't think 7.75 is half of 10.

The extra 3,566 blocks that have been created released an extra 85,584 BTC into a system of 11,700,000 BTC.  This is an increase of 0.7% spread out over nearly 3 months.

I do see a trend there https://blockchain.info/charts/avg-confirmation-time  , do the average at the end of the year again.

If the trend continues (divergence between difficulty and the hash rate growth) we are at around 1 minute in a year. That is taking your numbers into account 0.7% x 6ish = 4.2% BTC/money base expansion over 3 months. That is a serious dilution!

Disclaimer: I hold bitcoins.

[frito]

Sneaky depreciation? I don't see any such depreciation in the charts I look at.

"(only few entities now create/mine the majority of BTC)"

I also think you are wrong here. This chart shows that 3/4 of the hashrate come from pools, which I can only assume are mostly individuals mining not large operations.

"Is the transaction fees paid to the miners also counted in the total approximate constant BTC creation?"

Transaction fees are paid from coins already in existance. Money changing hands, not being created.

I think your theory is a little flawed...

1.I agree about the fees.

2. Did I say sneaky before? Now I say massive and in your face one. Read my response to DannyHamilton above about the 4.7%ish (over 3 month period) possible inflation due to the accelerated creation.
And talk about flawed.

I am not saying BTC should go down, I am talking about rate of dilution.

Considering that BTC is grossly undervalued now my dilution talk is just a mental exercise (for the sharper ones on this forum). BTC in 10y should be at least worth as a smaller European national economy i.e. about 200-300billion USD (in current money(not future)). It is worth now less than $2 billion.

[GhanaGamboy]

2. Did I say sneaky before? Now I say massive and in your face one. Read my response to DannyHamilton above about the 4.7%ish (over 3 month period) possible inflation due to the accelerated creation.
And talk about flawed.

Why flawed, when the difficulty will start to steady decrease, the oposite will happen - bit less BTC will be mined

I am not saying BTC should go down, I am talking about rate of dilution.

Considering that BTC is grossly undervalued now my dilution talk is just a mental exercise (for the sharper ones on this forum). BTC in 10y should be at least worth as a smaller European national economy i.e. about 200-300billion USD (in current money(not future)). It is worth now less than $2 billion.

Good luck 

[pontiacg5]

ASICs coming online are a huge change to the bitcoin world, I suspect that the economics of mining will eventually let the protocol catch up. I highly doubt you'd ever see confirmation times that short, the rate of growth to maintain something like that would be ridiculous. If bitcoin had that much attention I doubt a slight (and temporary) dilution will make a difference.

[BurtW]

According to this estimate:  http://bitcoinclock.com/

The next reward drop will occur about 2016-10-09

So yes, it has been pulled in a bit due to the rapid rise in hash rate.

No big deal.  The last reward drop was also pulled in by the rapid rise in hash rate when we went from CPU to GPU.

[Totalslaughter]

It just sucks because the amount of hashing power anyone will need to mine any kind of decent amount in a small time frame just keeps going up. 2014 it's going to be crazy. Also... 13 hours round on slush's pool atm. Crazy long round / bad luck.