fgmnp (OP)
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December 31, 2011, 11:24:56 PM Last edit: July 13, 2019, 07:44:07 AM by deego |
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Serge
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January 01, 2012, 02:28:06 PM |
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how unfair that i wasn't born in Columbus time !! i would have done much better job of discovering Americas!
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casascius
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January 01, 2012, 02:42:18 PM Last edit: January 01, 2012, 03:01:36 PM by casascius |
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I once complained regularly about early adopter unfairness, but now that prices have touched all the way down to $2 and stayed there long enough to be well within reach of anyone with vision, I don't think the complaint has merit anymore.
Bitcoin is either going to be really big or really not. If it's going to be really big, then being able to get your fill on them at $2 or $3 or $4 is a fucking deal.
A four-dollar Bitcoin is like suggesting that all the Bitcoins in the world are worth $32 million dollars.... in other words, Bitcoin is less significant to the world than the value of the houses on one street in an upscale neighborhood in my city. There are single yachts and private luxury aircraft valued at more than that. There are dilapidated skyscrapers worth more than that, scheduled for implosion. If I google "Britney Spears net worth", I see a figure of $155 million, so right now, the world values Britney Spears five times more than Bitcoin... today now that she is known as psychotic, not years ago when she was actually producing albums regularly.
I am not here because I think Bitcoin is a neat little gimmick. I am here because I think it has world-changing properties once the chasm of the knowledge of how it works is finally crossed by the world. It took the world a decade to warm up to e-mail and text messaging, and now it doesn't know what it would do without these. The world doesn't have to know about the block chain and hashes and crap, all they need to know is it's the new way to do cash deals without being in person to exchange cash, and how to deal in bitcoin safely. If and when that point gets reached, $32 million dollars is, as one article put it, going to seem downright puny.
The time to be an early adopter is today and it's open to everybody. Thank the world for dumping Bitcoin in the last half of 2011 to give the rest of you a fair shake. Buy now.
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Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable. I never believe them. If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins. I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion. Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice. Don't keep coins online. Use paper or hardware wallets instead.
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JoelKatz
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Democracy is vulnerable to a 51% attack.
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January 01, 2012, 02:44:30 PM |
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My answer is always just like yours. Either Bitcoin is going to make it big or it's not. If it's not, then why care about early-adopter unfairness? If it is, then if you're not an early-adopter, it's purely by your own choice. http://bitcoin.stackexchange.com/a/2112/85
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I am an employee of Ripple. Follow me on Twitter @JoelKatz 1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN
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N12
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January 01, 2012, 03:41:03 PM |
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I once complained regularly about early adopter unfairness, but now that prices have touched all the way down to $2 and stayed there long enough to be well within reach of anyone with vision, I don't think the complaint has merit anymore. I’m feeling the same way now. 2.x Dollar Bitcoins are a joke in relation to what has been achieved, and how mature the project is now. Anyone who didn’t buy there and doesn’t buy here despite all media attention we had and are still having cannot complain about putting down the opportunity to become an "early adopter". But what about the people who bought when the price was way higher than it is now? They absolutely got raped by the fact that the coins were poorly distributed.
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JoelKatz
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January 01, 2012, 04:38:38 PM |
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But what about the people who bought when the price was way higher than it is now? They absolutely got raped by the fact that the coins were poorly distributed. They got raped by the collapse of a speculative bubble. I'm not sure how you're connecting that to "poor distribution" (or, for that matter, what you mean by that phrase).
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I am an employee of Ripple. Follow me on Twitter @JoelKatz 1Joe1Katzci1rFcsr9HH7SLuHVnDy2aihZ BM-NBM3FRExVJSJJamV9ccgyWvQfratUHgN
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N12
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January 01, 2012, 04:57:25 PM |
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But what about the people who bought when the price was way higher than it is now? They absolutely got raped by the fact that the coins were poorly distributed. They got raped by the collapse of a speculative bubble. I'm not sure how you're connecting that to "poor distribution" (or, for that matter, what you mean by that phrase). The poor distribution becomes apparent when you have a look at this chart: http://bitcoin.sipa.be/speed-ever.png It shows difficulty 1 for a whole year. The market has never been distributing those coins properly, as there haven’t been huge panic sells like this. The early miners have been enjoying an unfairly high price AND unfairly low risks to accumulate Bitcoins. Also, how can a free market void of government influence even produce a bubble? I thought you libertarians believe that bubbles are only due to the expansion and contraction of credit?
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N12
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January 01, 2012, 05:00:27 PM |
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Also, bubbles never reinflate (at least not that quickly), so surely a rally now to new alltime highs would be impossible?
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Mark Oates
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January 01, 2012, 06:46:15 PM |
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Yea, it's unfair that all the early adopters will lose all their money when bitcoin crashes. ![Wink](https://bitcointalk.org/Smileys/default/wink.gif) or, It's unfair that those investing their time and money in the success of a startup company (an open source project called bitcoin) should earn any reward if it's successful. ![Wink](https://bitcointalk.org/Smileys/default/wink.gif)
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N12
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January 01, 2012, 07:27:08 PM |
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It's unfair that those investing their time and money in the success of a startup company (an open source project called bitcoin) should earn any reward if it's successful. ![Wink](https://bitcointalk.org/Smileys/default/wink.gif) Yeah right, all this mining with a CPU at difficulty 1 should clearly be rewarded with 5 digit Bitcoin sums, AT LEAST! ![Grin](https://bitcointalk.org/Smileys/default/grin.gif) And then those poor folks are at risk of losing their money. Man, that sucks.
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casascius
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January 01, 2012, 07:54:22 PM |
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Those of you worried about all of the bitcoins mined at difficulty 1 need to take a look at this graph. http://ecdsa.org/stats.htmlWhat you'll see, is that the vast majority of those coins haven't been touched. Not when bitcoins were $20, not when they were on their way up, not when they were on their way down. Also, you'll be able to see that most of those coins didn't get produced at a rate of 50 every 10 minutes. The more coins that get mined, the less they matter. Those are what, a million coins? Two million? As time goes on, and we're cranking out a million new coins every few months, those first coins matter that much less. Possibilities that have crossed my mind include: 1 - whoever owns them has so many, knows that dumping them would crash the market, and has enough faith in bitcoin's future to not blow his load all at once. Is waiting for the big long term payoff, a $30 bitcoin price is maybe small potatoes in his vision, or is incentive only enough to dump a few. 2 - many of them may be lost forever. 3 - many of them must be owned by Satoshi, who maybe died, or perhaps is also smart enough to know that moving all of those early coins will give us clues to his existence and deliberately spends only newer coins. I once feared that those coins would come out and crash the market - I'm not so worried at this point. If someone has them and is able to spend them, I trust that whoever's got them isn't going to crash my bitcoins to pennies with them, and has an interest in seeing Bitcoin's long-term longevity. (and if they do, I'll be standing by to buy many of them up for pennies).
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Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable. I never believe them. If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins. I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion. Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice. Don't keep coins online. Use paper or hardware wallets instead.
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kgo
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January 01, 2012, 08:07:13 PM |
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The early miners have been enjoying an unfairly high price AND unfairly low risks to accumulate Bitcoins.
People seem to think that because the cost of mining bitcoins was lower in the old days, it was lower risk. But that's not the way I do the math. If you were mining (or working on the bitcoin software or writing exchange software) in 2009 it was highly likely that you would lose everything. All of your investment. Everything you contributed would be wasted if bitcoin simply failed, which was highly likely in the early days. Now it's much more unlikely to lose everything. Sure you might be down 85% if you bought at $30. You might be down a significant amount if you spent a bunch of money on mining rigs as difficulty spiked. But the likelihood of losing everything is much, much lower than it was two years ago. Hence it's lower risk now. Analogy time: If someone spends 5-10K on a startup running out of a garage, they basically need to write off that investment. It's most likely that the startup will fail completely and there will never be a return on the investment. Now suppose the startup is successful. And they do an IPO (or Google buys them) at $1 Billion dollars. Who has a higher risk investment? The original angel investor or google/people-buying-stock? Also, how can a free market void of government influence even produce a bubble? I thought you libertarians believe that bubbles are only due to the expansion and contraction of credit?
Huh? Libertarians think the government has a monopoly on speculative bubbles? It was irrational exuberance.
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casascius
Mike Caldwell
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January 01, 2012, 08:14:10 PM |
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Huh? Libertarians think the government has a monopoly on speculative bubbles? It was irrational exuberance.
And to me, there was never a bubble, just a depressive phase where everyone turned their back on Bitcoin and panic sold it because they were convinced it was a security black hole and that their bitcoins were next to go "poof" like allinvain or those victimized by mybitcoin.com. Whenever ask myself what's worth more, Bitcoin - an idea I think is too big to fail - valued at the moment at $40 million - or three Walgreens stores like this one listed for sale at $14 million ( http://www.cityfeet.com/Commercial/ForSale/7800-Redwood-Road-West-Jordan-UT-84088-15108158L15108158L1.aspx)... I can't help but conclude the value of a Bitcoin is a fucking steal right now. Especially while the world is finally just waking up to the idea of "OK, bitcoins aren't so bad after all, we just shouldn't leave them right under hackers' noses and we'll be fine".
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Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable. I never believe them. If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins. I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion. Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice. Don't keep coins online. Use paper or hardware wallets instead.
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N12
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January 01, 2012, 08:18:57 PM |
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People seem to think that because the cost of mining bitcoins was lower in the old days, it was lower risk. But that's not the way I do the math. If you were mining (or working on the bitcoin software or writing exchange software) in 2009 it was highly likely that you would lose everything. All of your investment. Everything you contributed would be wasted if bitcoin simply failed, which was highly likely in the early days.
The early miner had a better risk/reward ratio, because the investment and barrier to entry with just a CPU running a few months for a few tens of thousands of BTC is ridiculous. So yes, it was lower risk because there was less investment (hell, I wouldn’t even call it an investment, only in a very strict technical sense) to risk. Thanks for your valid points, casascius. I think you are right.
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cypherdoc
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January 01, 2012, 08:35:58 PM |
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But what about the people who bought when the price was way higher than it is now? They absolutely got raped by the fact that the coins were poorly distributed. They got raped by the collapse of a speculative bubble. I'm not sure how you're connecting that to "poor distribution" (or, for that matter, what you mean by that phrase). The poor distribution becomes apparent when you have a look at this chart: http://bitcoin.sipa.be/speed-ever.png It shows difficulty 1 for a whole year. The market has never been distributing those coins properly, as there haven’t been huge panic sells like this. The early miners have been enjoying an unfairly high price AND unfairly low risks to accumulate Bitcoins. Also, how can a free market void of government influence even produce a bubble? I thought you libertarians believe that bubbles are only due to the expansion and contraction of credit? b/c ppl did go out and borrow USD's to funnel into btc on the way up; then the price crashed and then here's the kicker; Bitcoinica became available in September which caused an overshoot to the downside below the $4 breakeven point for miners. we are now witnessing the snapback effect of that.
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kgo
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January 01, 2012, 08:54:01 PM |
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The early miner had a better risk/reward ratio, because the investment and barrier to entry with just a CPU running a few months for a few tens of thousands of BTC is ridiculous.
If you look at the actual rewards, then yes mining in 2009 was lower risk. But that's using hindsight. That's cheating. You can't do the risk/reward calculation using today's numbers. That's survivor bias. As late as May 2010 those months and months of work would get you two pizzas. When mtgox opened, early adopters sold bitcoins for pennies. Were these people just stupid early adopters? Or was it the general consensus among the adopters that bitcoins just weren't worth that much? At the time (2009) you would need to measure potential reward, since the future is an unknown. And at the time, I don't think anyone could say with any significant confidence that bitcoin would even break the dollar barrier, let alone the 10, 20, 30 dollar barrier. It was not a sure thing. Back to my startup analogy, when you invest in that company working in a garage for $5000, you need to go in with the assumption that you're going to lose everything. Startups are inherently high risk. If the startup does succeed, and end up being worth a billion dollars, this doesn't retroactively make your investment of $5000 a safe low-risk investment.
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N12
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January 01, 2012, 09:12:48 PM |
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Don’t you get it? Running your CPU a bit is not comparable to a $5000 investment in a startup. People do that everyday for free for folding@home etc., it’s just a ridiculous "risk" to lose the CPU time or energy expenditure in comparison to the possible gains. So yes, I think the risk/reward ratio was way higher, along with a lower barrier to entry, and I’m not at all using hindsight. Here, perhaps this statement from Hal will help: http://www.mailarchive.com/cryptography@metzdowd.com/msg10152.htmlAs an amusing thought experiment, imagine that Bitcoin is successful and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world. Current estimates of total worldwide household wealth that I have found range from $100 trillion to $300 trillion. With 20 million coins, that gives each coin a value of about $10 million.
So the possibility of generating coins today with a few cents of compute time may be quite a good bet, with a payoff of something like 100 million to 1! Even if the odds of Bitcoin succeeding to this degree are slim, are they really 100 million to one against? Something to think about...
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Mark Oates
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January 01, 2012, 09:16:11 PM |
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If the startup does succeed, and end up being worth a billion dollars, this doesn't retroactively make your investment of $5000 a safe low-risk investment. I suppose the counter-argument is that (very) early adoption wasn't really that much of a risk, any more than buying a booster pack of magic cards is a risk. And perhaps there is a disproportionate amount of benefit to the "bitcoin hipsters" who were "using bitcoin before it popular" - before it was anything of consequential wealth.
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N12
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January 01, 2012, 09:16:30 PM |
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And before someone brings up the precious metal argument:
The early miners are not comparable at all, because they got the standard maximum inflation rate we enjoy now as well due to a 4 yr inelastic reward. Basically they could carry home the same amount of gold per day, alone and maybe with a pickaxe, as people would be able to now with hi-tech and millions of people all over the world.
I simply do not think that donating a bit of computer time should be classified the same as an investment in a startup like Google. Call me old-fashioned.
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kgo
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January 01, 2012, 09:30:15 PM |
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Don’t you get it? Running your CPU a bit is not comparable to a $5000 investment in a startup.
And bitcoin market cap isn't 1 billion either. Hence the analogy. Here, perhaps this statement from Hal will help: http://www.mailarchive.com/cryptography@metzdowd.com/msg10152.htmlAs an amusing thought experiment, imagine that Bitcoin is successful and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world. Current estimates of total worldwide household wealth that I have found range from $100 trillion to $300 trillion. With 20 million coins, that gives each coin a value of about $10 million.
So the possibility of generating coins today with a few cents of compute time may be quite a good bet, with a payoff of something like 100 million to 1! Even if the odds of Bitcoin succeeding to this degree are slim, are they really 100 million to one against? Something to think about... So with bitcoins currently at five dollars, if you buy today, your potential reward using the same math is 2 million to 1. Which takes us back to JoelKatz' earlier comment: My answer is always just like yours. Either Bitcoin is going to make it big or it's not. If it's not, then why care about early-adopter unfairness? If it is, then if you're not an early-adopter, it's purely by your own choice. http://bitcoin.stackexchange.com/a/2112/85
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