Gold collapsing. Bitcoin UP.

[smooth]

These ASICs are going to be nearly obsolete by the time anyone plugs them into a socket.

I don't know about that. First gen, yeah probably. But sooner or later ASICs will hit Moore's law or worse like everything else and their usable life will be measured in years (2-5 or more) like other chips.

21's plan, as stated, is pure bullshit. The only question is whether they know it or not.

Probably some of both

But bitcoin technology in the form of an automatic economic actor inside a device could be useful provided there is something for the devices to trade. Could be anything. A wallet and an automatic trader inside every device. They could have something like that in mind.

They said exactly that is part of what they are doing. So where's the big mystery here?

[smooth]

1) Monero is still based on mixing. There is still taint there since there are traces of history. This is not a real step forward like zerocoin (or zerocash) which fully erases all history.

In fact even Zerocash has timing and other related side-channel attacks, such as vulnerability to IP monitoring. If  you know when someone sent a transaction and you are doing IP monitoring you can likely identify the transaction, even if you can't see what is in the transaction.

If you limit yourself to passive analysis of the blockchain (and ignore timing on the blockchain) then Zerocash is opaque, but the tradeoff for that is much newer and dodgier crypto than Monero (plus the still-trusted setup; their proposal is to do multiparty, but if you aren't a participant, or weren't around to witness it, you are still trusting it). There was recently a serious break in one of the crypto tools used by Zerocash. If that had happened with a live coin in operation the entire coin could well (likely would have been) destroyed.

I don't know if Zerocash will be ready for prime time soon enough to succeed. I'll certainly hedge in it if a coin launches and doesn't get too much too wrong though.

[smooth]

the only financial plan i've heard of is the 25/75% split btwn the consumer and 21, so the consumer is going to get spending coin.

I'm pretty sure in the white paper-ish thing they posted it says that the split can be anything, and is up to the manufacturer of the devices. I don't remember if it explicitly said that 21 will be using 75/25 for any particular devices or if that was just an example, or earlier speculation from third parties.

[Erdogan]

These ASICs are going to be nearly obsolete by the time anyone plugs them into a socket.

I don't know about that. First gen, yeah probably. But sooner or later ASICs will hit Moore's law or worse like everything else and their usable life will be measured in years (2-5 or more) like other chips.

21's plan, as stated, is pure bullshit. The only question is whether they know it or not.

Probably some of both

But bitcoin technology in the form of an automatic economic actor inside a device could be useful provided there is something for the devices to trade. Could be anything. A wallet and an automatic trader inside every device. They could have something like that in mind.

They said exactly that is part of what they are doing. So where's the big mystery here?

The mystery here is that devices could be paid for by mining. Maybe the general bitcoin society has misunderstood.

[smooth]

New Poll:

TPTB_need_war is:

You realize that any "poll" like this is itself trolling right?

If you don't like his posts, ignore him.

Personally I think sometimes he adds value and sometimes he doesn't.

[smooth]

Users mining in algorithm where pools are impossible is positive for decentralization of mining.

This is an interesting question. I've seen the counterargument that preventing pools increases the incentive for large farms (including, I suppose, the distributed sort of farms that involve devices in disparate locations but centrally controlled). That might be negative for decentralization of mining broadly, since at least with pools as they mostly exist today, the actual miners can switch pools (often cypherdoc makes this argument). I'm not sure.

[Peter R]

...
21's plan, as stated, is pure bullshit. The only question is whether they know it or not.

Let's do an order-of-magnitude calculation…

An article from Life Hacker reports that it costs about $0.50 to keep your phone charged-up for a year:



Now, my phone gets pretty warm when it's charging so the new mining chip can't draw that much more power.  But then again, a lot of times my phone is plugged in and already fully charged, and so the mining chip might as well be running.  So let's say that 21 Inc. can boost the yearly energy consumption of the typical smart phone from $0.50 to $3.00 before people start to complain about "hot phones."  $2.50 goes to mining bitcoins…

We'll also make the assumption that the cost to mine the bitcoins is exactly equal to the market value of the mined coins.  In reality, the first coins will probably be cheaper to mine, becoming progressively more expensive to mine as the network hash rate grows.  But for our order-of-magnitude calculation, we'll assume that $1 of BTC cost $1 of electricity to produce.  

At the current market value of ~$250 / BTC, this means that each phone will produce approximately

   ->  0.01 BTC per year, or
   -> 1,000,000 satoshis per year, or
   -> 83,000 satoshis per month, or
   -> 2,700 satoshis per day

For comparison purposes, note that the current dust limit is 540 satoshis.  This means that the amount of bitcoins generated by the phones is not insignificant (when compared to the dust limit) over time periods measured in days, weeks or months.  

…Let's go further…

The same Life Hacker article claims that:

Global smartphone shipments (which includes people upgrading to newer phones) will reach 567 million units [in 2012] alone.

Let's be ambitious and assume that eventually 21 Inc. chips will be included with 10% of the new smart phone shipped (~57 million phones).  The total bitcoins produced by these phones would then be

          57,000,000 x 0.01 BTC / year
    =   570,000 BTC / year

Or about 1560 BTC per day.  Since there's presently ~3600 BTC mined per day, these 57 million smartphones would contribute

        ~43% of the network hash rate.    

If 75% of these mining rewards flow back to 21 Inc and its partners, that works out to

         0.75 x 57,000,000 x $2.50 / year
  ~= $107,000,000 per year

This means that the expected revenue is not insignificant.  

[kodtycoon]

brilliant analysis peter. didnt realise that their plan would be that lucrative. would these chips not reduce the battery life of phones though?

[YEAROFBULL15]

http://www.bbc.com/news/technology-32781244

edit: Sorry for posting this, just read it and it's incredibly stupid.

Let the author know https://twitter.com/pcoletti

[Peter R]

would these chips not reduce the battery life of phones though?

Just guessing, but I'd imagine that the mining chip would only run at full power when the phone is fully-charged and plugged in.  At other times, and to conserve energy, the mining chip can be running at a slower clock speed or not running at all. 

[kodtycoon]

would these chips not reduce the battery life of phones though?

Just guessing, but I'd imagine that the mining chip would only run at full power when the phone is fully-charged and plugged in.  At other times, and to conserve energy, the mining chip can be running at a slower clock speed or not running at all. 

i guess that means every night then, as i would think that over night is the most common charging period. this is pretty cool i have to say. with phones collecting near half the number of bitcoins mined, thats going to cut down supply drastically - more so come the next halving.

[solex]

ZH comments on Cypherdoc's fav chart
"It is very rare to see Dow Industrials hitting new highs as Dow Transports prints new range lows... one of them is wrong here..."

http://www.zerohedge.com/news/2015-05-20/one-these-things-not-other

[cypherdoc]

...
21's plan, as stated, is pure bullshit. The only question is whether they know it or not.

Let's do an order-of-magnitude calculation…

An article from Life Hacker reports that it costs about $0.50 to keep your phone charged-up for a year:



Now, my phone gets pretty warm when it's charging so the new mining chip can't draw that much more power.  But then again, a lot of times my phone is plugged in and already fully charged, and so the mining chip might as well be running.  So let's say that 21 Inc. can boost the yearly energy consumption of the typical smart phone from $0.50 to $3.00 before people start to complain about "hot phones."  $2.50 goes to mining bitcoins…

We'll also make the assumption that the cost to mine the bitcoins is exactly equal to the market value of the mined coins.  In reality, the first coins will probably be cheaper to mine, becoming progressively more expensive to mine as the network hash rate grows.  But for our order-of-magnitude calculation, we'll assume that $1 of BTC cost $1 of electricity to produce.  

At the current market value of ~$250 / BTC, this means that each phone will produce approximately

   ->  0.01 BTC per year, or
   -> 1,000,000 satoshis per year, or
   -> 83,000 satoshis per month, or
   -> 2,700 satoshis per day

For comparison purposes, note that the current dust limit is 540 satoshis.  This means that the amount of bitcoins generated by the phones is not insignificant (when compared to the dust limit) over time periods measured in days, weeks or months.  

…Let's go further…

The same Life Hacker article claims that:

Global smartphone shipments (which includes people upgrading to newer phones) will reach 567 million units [in 2012] alone.

Let's be ambitious and assume that eventually 21 Inc. chips will be included with 10% of the new smart phone shipped (~57 million phones).  The total bitcoins produced by these phones would then be

          57,000,000 x 0.01 BTC / year
    =   570,000 BTC / year

Or about 1560 BTC per day.  Since there's presently ~3600 BTC mined per day, these 57 million smartphones would contribute

        ~43% of the network hash rate.    

If 75% of these mining rewards flow back to 21 Inc and its partners, that works out to

         0.75 x 57,000,000 x $2.50 / year
  ~= $107,000,000 per year

This means that the expected revenue is not insignificant.  

interesting analysis.

i'm amused by the guys here presuming that the 21 guys have not made a similar analysis.  in fact, i'm sure they've made a very extensive marketing and technical analysis.  Balaji and company are no slouches.  they are in a different category from your normal, shoestring startup with minimal capital.  Balaji is an established VC as are his cohorts.  he mentions this:

"towards that end, our team of PhDs in EE from MIT, Stanford, and CMU has built not just a chip, but a full technology stack around the chip — including reference devices, datasheets, a cloud backend, and software protocols. And we have already engaged with a wide variety of early access partners across the industry, from small startups to multibillion dollar hardware companies."

similarly, the list of investors includes alot of smart, analytical, successful people and companies.  they surely didn't just throw their money at this w/o any research.

[smooth]

i'm amused by the guys here presuming that the 21 guys have not made a similar analysis.  in fact, i'm sure they've made a very extensive marketing and technical analysis.  Balaji and company are no slouches.  they are in a different category from your normal, shoestring startup with minimal capital.  Balaji is an established VC as are his cohorts.  he mentions this:

"towards that end, our team of PhDs in EE from MIT, Stanford, and CMU has built not just a chip, but a full technology stack around the chip — including reference devices, datasheets, a cloud backend, and software protocols. And we have already engaged with a wide variety of early access partners across the industry, from small startups to multibillion dollar hardware companies."

similarly, the list of investors includes alot of smart, analytical, successful people and companies.  they surely didn't just throw their money at this w/o any research.

Vetting of a startup funding pitch always includes ensuring there is at least a plausible scenario for success, so it should be no surprise that these scenarios can be constructed. Weighing probabilities, on the other hand, is far subjective and not necessarily (in fact necessarily not) at the same level of rigor. I remain unconvinced that the valuation isn't out of whack. I most certainly would not take a piece of a $100 million funding round (which likely values the company closer to a billion) based on what we know now. There may be more we don't know, however.

It's nice to see actual numbers though, as opposed to a lot of OOMA statements about how the revenue flatly isn't significant.

[Erdogan]

...
21's plan, as stated, is pure bullshit. The only question is whether they know it or not.

Let's do an order-of-magnitude calculation…

An article from Life Hacker reports that it costs about $0.50 to keep your phone charged-up for a year:



Now, my phone gets pretty warm when it's charging so the new mining chip can't draw that much more power.  But then again, a lot of times my phone is plugged in and already fully charged, and so the mining chip might as well be running.  So let's say that 21 Inc. can boost the yearly energy consumption of the typical smart phone from $0.50 to $3.00 before people start to complain about "hot phones."  $2.50 goes to mining bitcoins…

We'll also make the assumption that the cost to mine the bitcoins is exactly equal to the market value of the mined coins.  In reality, the first coins will probably be cheaper to mine, becoming progressively more expensive to mine as the network hash rate grows.  But for our order-of-magnitude calculation, we'll assume that $1 of BTC cost $1 of electricity to produce.  

At the current market value of ~$250 / BTC, this means that each phone will produce approximately

   ->  0.01 BTC per year, or
   -> 1,000,000 satoshis per year, or
   -> 83,000 satoshis per month, or
   -> 2,700 satoshis per day

For comparison purposes, note that the current dust limit is 540 satoshis.  This means that the amount of bitcoins generated by the phones is not insignificant (when compared to the dust limit) over time periods measured in days, weeks or months.  

…Let's go further…

The same Life Hacker article claims that:

Global smartphone shipments (which includes people upgrading to newer phones) will reach 567 million units [in 2012] alone.

Let's be ambitious and assume that eventually 21 Inc. chips will be included with 10% of the new smart phone shipped (~57 million phones).  The total bitcoins produced by these phones would then be

          57,000,000 x 0.01 BTC / year
    =   570,000 BTC / year

Or about 1560 BTC per day.  Since there's presently ~3600 BTC mined per day, these 57 million smartphones would contribute

        ~43% of the network hash rate.    

If 75% of these mining rewards flow back to 21 Inc and its partners, that works out to

         0.75 x 57,000,000 x $2.50 / year
  ~= $107,000,000 per year

This means that the expected revenue is not insignificant.  

interesting analysis.

i'm amused by the guys here presuming that the 21 guys have not made a similar analysis.  in fact, i'm sure they've made a very extensive marketing and technical analysis.  Balaji and company are no slouches.  they are in a different category from your normal, shoestring startup with minimal capital.  Balaji is an established VC as are his cohorts.  he mentions this:

"towards that end, our team of PhDs in EE from MIT, Stanford, and CMU has built not just a chip, but a full technology stack around the chip — including reference devices, datasheets, a cloud backend, and software protocols. And we have already engaged with a wide variety of early access partners across the industry, from small startups to multibillion dollar hardware companies."

similarly, the list of investors includes alot of smart, analytical, successful people and companies.  they surely didn't just throw their money at this w/o any research.

The analyzis is flawed, in that it does not take into account all cost. The price of mining a bitcoin tends to approach the price of a bitcoin, so the question is rather is 21's approach equal to or better than large scale mining. If you suppose the chip is free, the design is free, the electricity is free and the management of the device for the mining purpose is free, then it can compete. But none of those things are free.

[cypherdoc]

i'm amused by the guys here presuming that the 21 guys have not made a similar analysis.  in fact, i'm sure they've made a very extensive marketing and technical analysis.  Balaji and company are no slouches.  they are in a different category from your normal, shoestring startup with minimal capital.  Balaji is an established VC as are his cohorts.  he mentions this:

"towards that end, our team of PhDs in EE from MIT, Stanford, and CMU has built not just a chip, but a full technology stack around the chip — including reference devices, datasheets, a cloud backend, and software protocols. And we have already engaged with a wide variety of early access partners across the industry, from small startups to multibillion dollar hardware companies."

similarly, the list of investors includes alot of smart, analytical, successful people and companies.  they surely didn't just throw their money at this w/o any research.

Vetting of a startup funding pitch always includes ensuring there is at least a plausible scenario for success, so it should be no surprise that these scenarios can be constructed. Weighing probabilities, on the other hand, is far subjective and not necessarily (in fact necessarily not) at the same level of rigor. I remain unconvinced that the valuation isn't out of whack. I most certainly would not take a piece of a $100 million funding round (which likely values the company closer to a billion) based on what we know now. There may be more we don't know, however.

It's nice to see actual numbers though, as opposed to a lot of OOMA statements about how the revenue flatly isn't significant.

but this isn't your average startup.

this is a company comprised of pre-existing industry leaders and companies that clearly are trying to change an industry.

[smooth]

i'm amused by the guys here presuming that the 21 guys have not made a similar analysis.  in fact, i'm sure they've made a very extensive marketing and technical analysis.  Balaji and company are no slouches.  they are in a different category from your normal, shoestring startup with minimal capital.  Balaji is an established VC as are his cohorts.  he mentions this:

"towards that end, our team of PhDs in EE from MIT, Stanford, and CMU has built not just a chip, but a full technology stack around the chip — including reference devices, datasheets, a cloud backend, and software protocols. And we have already engaged with a wide variety of early access partners across the industry, from small startups to multibillion dollar hardware companies."

similarly, the list of investors includes alot of smart, analytical, successful people and companies.  they surely didn't just throw their money at this w/o any research.

Vetting of a startup funding pitch always includes ensuring there is at least a plausible scenario for success, so it should be no surprise that these scenarios can be constructed. Weighing probabilities, on the other hand, is far subjective and not necessarily (in fact necessarily not) at the same level of rigor. I remain unconvinced that the valuation isn't out of whack. I most certainly would not take a piece of a $100 million funding round (which likely values the company closer to a billion) based on what we know now. There may be more we don't know, however.

It's nice to see actual numbers though, as opposed to a lot of OOMA statements about how the revenue flatly isn't significant.

but this isn't your average startup.

this is a company comprised of pre-existing industry leaders and companies that clearly are trying to change an industry.

I've been around the scene a bit. Their team and backers make the cut, but pretty much every well funded startup looks like that. There are a lot of MIT, Stanford, CMU, etc. PhD. and second-time entrepreneurs around. A whole lot.

That valuation at their stage is out of line, even considering the team (again with the caveat that we don't know everything). VC's most certainly do screw up and burn money on big deals. Often it's the most impressive startups that encourage overpaying (what idiot would overpay for a bunch of amateurs?).

[Peter R]

The analyzis is flawed, in that it does not take into account all cost.

The analysis estimates the revenue that might flow to 21 Inc and its partners from the mining chips, under the assumed conditions.  Trying to estimate the profits (in which case you'd "take into account all cost") would require more guesswork.  

[smooth]

The price of mining a bitcoin tends to approach the price of a bitcoin, so the question is rather is 21's approach equal to or better than large scale mining.

"Tends to approach" is vague.

In the short term, the marginal cost of mining almost exactly equals the price of a Bitcoin (excluding, possibly, some short transition periods when the price of a Bitcoin is just so high and/or increasing so fast that it is hard to catch it), but if you are below marginal cost, then you are more efficient than the marginal miner and you make a operating profit, which may or may not cover your investment. In the long term, that's the time horizon when investments pay off, or don't. Nothing lasts forever.

[Erdogan]

The price of mining a bitcoin tends to approach the price of a bitcoin, so the question is rather is 21's approach equal to or better than large scale mining.

"Tends to approach" is vague.

In the short term, the marginal cost of mining almost exactly equals the price of a Bitcoin (excluding, possibly, some short transition periods when the price of a Bitcoin is just so high and/or increasing so fast that it is hard to catch it), but if you are below marginal cost, then you are more efficient than the marginal miner and you make a operating profit, which may or may not cover your investment. In the long term, that's the time horizon when investments pay off, or don't. Nothing lasts forever.

No, tend to approach is the correct term. There cost will never exactly reflect the price, due to speculative errors from the miners when they decide to expand or contract, therefore the cost will be different also between miners. So again, can the 21's plan for mining compete with large scale mining? Small scale mining can be and is continually tested, what they bring to the table is a new chip. So can the new chip revive small scale mining?


Edit: You can never know in advance, but I would guess that if the chip is good in a random small scale device, it is even better if you pack a few hundred in a dedicated device with proportionally designed power supply, fans the rest of the stuff that is needed. Is it possible to construct a chip that is better than current mining, and at the same time can not be used large scale?

You can not rely on persons with experience in funding. Stranger projects have been started, a company with million dollar donut cars, selling for 100K per car and losing 900K per car comes to mind.