$5000 per coin will never happen if PoW mining is allowed to continue

[kokojie]

kokojie, you have a few decent points, but I agree with inBitweTrust you have overplayed your hand here.

First, the main thing working against the price right now is the monetary supply inflation rate.  It is currently between 10% and 15% per year right now depending on how many coins, if any, are assumed to be lost.  And regardless of the total available supply, we know there are at least 1.3 million coins set to be issues per year right now.  At $400 per coin that is over $500 million in new wealth that would have to come in to buy up all those coins.

So what if was some sort of proof of state, and those 1.3 million coins went to existing holders?  You have a good point that us existing holders wouldn’t be under the same finical pressure to sell coins as the miners, as ostensibly we wouldn’t have such large expenses to cover.  But make no mistake: many of those new coins would still hit the market, and there would still be massive downward price pressure due to 1.3 million new coins hitting the market.

Proof of work is ingenious.  It doesn’t solve all problems though, and I think the community would be wise to always consider adapting the bitcoin security system if better solutions are proven.  Economic efficiency will be part of the security calculation, and I would not be at all surprised to see a PoS / PoW hybrid system in the future.

You keep saying PoW mining transfers value out of the ecosystem.  I don’t think that is the appropriate way to view it.  I see it as more helpful to look at all of the mining hardware as an investment the community is making in its own security system.  How much do we invest in such a system?  The current incentives suggest the investment be equal to the expected value of all the un-mined coins + expected transaction fees.  I will agree that this incentive could be leading us astray, that we could be over-investing in ASIC hardware and electricity costs.  So the question is, what should we be investing in instead?  Perhaps more code development?  More legal work?  More bitcoin education?  What if we, as a community, could figure out a way to steer 20% of mining revenues towards other goals?  That would be $100,000,000 per year at current prices.  It wouldn’t appreciably change the investment in hash power (okay, it would reduce it by 20%), but we would be expanding by 30-fold the amount invested in software development and etc.

I think the way this would be most likely to happen would be someone presenting a plan to all the mining pools, and getting them all to agree to turn over some percentage of mined coins to some representative body that would transparently reinvest the coins into aspects of the ecosystem other than hashing data centers.  The miners could like this proposal because they could realize that through collective effort, and “giving up” a fraction of their proceeds, they could actually boost the value of bitcoin by far more in the long run.

And you wouldn’t actually need all miners to go along with the plan, just 70% - 80% of the hash power.  The remaining ones could be forced to comply .  Miners getting together and planning:  you can call it a cartel, collusion, or cooperating.  It really just depends on your perspective.

Bitcoin talk threads that turn into rants are not going to solve the problem though, and there is just no way that proof-of-work mining is going to be abandoned outright or suddenly in any way.  Nor should it be.  It has gotten us this far already, so there is certainly something to it.  What can help is if someone wants to put in the work of building consensus amongst the mining pools to diverting a small fraction of new coins to other bitcoin projects.

Think multi-sig.  The whole endeavor could be done in a transparent, cryptographically audible fashion.

Good post, but you need to re-think inflation/coin supply's role in the whole thing. For example, when coin supply run out, zero. Do you think PoW mining would have no expense? of course not, it still needs to be very expensive, in order to secure the network (so that it's not cheap/easy to attack Bitcoin network). Therefore, coin supply really has no influence on the PoW expense. In fact, after the first halving, the PoW expense grew significantly more expensive than before.

As I have explained previously, PoW expense is a function of Bitcoin marketcap, it's roughly maintained at 10%. It has nothing to do with coin supply or inflation.

[kokojie]

Yes, but the part you quoted, is a speculation, therefore it's made up, just like your speculation. If you going to convince anyone, you'll need to post something written by the dev team.

Daniel isn't part of the dev team? Are you even aware of what the merger entails?

The merger is very clear,
80% existing BTSX
7% PTS
7% AGS
3% DNS
3% VOTE

The dev team will actually use some of their own dev funds to pay extra to the DNS holders, to make up for value lost after the announcement.

Where do you see a pay to the dev team in the merger? point it out

[DumbFruit]

Good post, but you need to re-think inflation/coin supply's role in the whole thing. For example, when coin supply run out, zero. Do you think PoW mining would have no expense? of course not, it still needs to be very expensive, in order to secure the network (so that it's not cheap/easy to attack Bitcoin network). Therefore, coin supply really has no influence on the PoW expense. In fact, after the first halving, the PoW expense grew significantly more expensive than before.

As I have explained previously, PoW expense is a function of Bitcoin marketcap, it's roughly maintained at 10%. It has nothing to do with coin supply or inflation.

It actually has everything to do with inflation. An ongoing discussion is happening right now where core developers are trying to figure out how to increase block sizes accurately without destroying all the hash-power in the network. (This has been a known problem for a long time.)

Mining is literally paid for through inflation, and eventually it will need to be paid for through transaction fees. Keeping fees high enough to reasonably cover hashing expenses is actually a very difficult problem to solve.

So you seem to be very misinformed about these costs, where they come from, what they achieve, and what's going to happen to them in the future.

[kokojie]

Good post, but you need to re-think inflation/coin supply's role in the whole thing. For example, when coin supply run out, zero. Do you think PoW mining would have no expense? of course not, it still needs to be very expensive, in order to secure the network (so that it's not cheap/easy to attack Bitcoin network). Therefore, coin supply really has no influence on the PoW expense. In fact, after the first halving, the PoW expense grew significantly more expensive than before.

As I have explained previously, PoW expense is a function of Bitcoin marketcap, it's roughly maintained at 10%. It has nothing to do with coin supply or inflation.

It actually has everything to do with inflation. An ongoing discussion is happening right now where core developers are trying to figure out how to increase block sizes accurately without destroying all the hash-power in the network.

Mining is literally paid for through inflation, and eventually it will need to be paid for through transaction fees. Keeping fees high enough to reasonably cover hashing expenses is actually a very difficult problem to solve.

So you seem to be very misinformed about these costs, where they come from, what they achieve, and what's going to happen to them in the future.

You are focusing on the details, about how miners are paid. I'm talking in the macro sense, that PoW mining will always be expensive, it doesn't matter if the miners are paid thru inflation/coin supply/transaction fee, it's not relevant to the discussion. Only one thing is certain, PoW mining expense will always exist, and it is perpetual.

[DumbFruit]

Only one thing is certain, PoW mining expense will always exist, and it is perpetual.

So? I'd rather pay that cost rather than have a central authority. Your mileage may vary.

[kokojie]

Only one thing is certain, PoW mining expense will always exist, and it is perpetual.

So? I'd rather pay that cost rather than have a central authority. Your mileage may vary.

You'll have to explain what you mean by central authority. PoS and PoW are just two methods to process transactions, PoS is actually much more distributed than PoW, since there are usually no pools, each PoS miner have to run a full node and mine individually.

[inBitweTrust]

Where do you see a pay to the dev team in the merger? point it out

I already gave you the links with the data. Your post itself has the answer within as well of where the capital infusion is coming from.

https://bitsharestalk.org/index.php?topic=10057.0
https://bitsharestalk.org/index.php?topic=10118.0

So BTSX will increase from under 2 billion to ~2.5 billion with vote taking 3% of this new "redistribution"

Do you need everything spoonfed to you?

[kokojie]

Where do you see a pay to the dev team in the merger? point it out

I already gave you the links with the data. Your post itself has the answer within as well of where the capital infusion is coming from.

https://bitsharestalk.org/index.php?topic=10057.0
https://bitsharestalk.org/index.php?topic=10118.0

Do you need everything spoonfed to you?

Yes do explain how does VOTE have anything to do with paying extra to the dev team. Stop avoiding answering the question.

[phillipsjk]

But for you is it a real problem these 500 million usd /year ?

Of course it's a problem, I'm being charged 10% tax on my Bitcoin holding, for something that is easily replaceable and useless.

We are still all early adopters. The selling pressure ensures that new users can still buy Bitcoins at reasonable prices.

Bitcoin works at any price. If Bitcoin was $5000/coin, I am not sure the network would handle the resulting transaction volume. (Which is why we are looking at a hard-fork to raise the maximum block size.)

PoW solves the initial coin distribution problem. In PoS, banks with unlimited money can easily take over the currency. With PoW, banks can not simply inflate the price in order to buy up all the currency. If they do that, miners would scramble to generate new coins with anything they can find.

[inBitweTrust]

Yes do explain how does VOTE have anything to do with paying extra to the dev team. Stop avoiding answering the question.

https://bitsharestalk.org/index.php?topic=10057.0
https://bitsharestalk.org/index.php?topic=10118.0

So BTSX will increase from under 2 billion to ~2.5 billion with VOTE taking 3% of this new "redistribution"

 As explained in the summary that delegates and the global moderator stickied:

https://bitsharestalk.org/index.php?topic=10214.0

[kokojie]

But for you is it a real problem these 500 million usd /year ?

Of course it's a problem, I'm being charged 10% tax on my Bitcoin holding, for something that is easily replaceable and useless.

We are still all early adopters. The selling pressure ensures that new users can still buy Bitcoins at reasonable prices.

Bitcoin works at any price. If Bitcoin was $5000/coin, I am not sure the network would handle the resulting transaction volume. (Which is why we are looking at a hard-fork to raise the maximum block size.)

PoW solves the initial coin distribution problem. In PoS, banks with unlimited money can easily take over the currency. With PoW, banks can not simply inflate the price in order to buy up all the currency. If they do that, miners would scramble to generate new coins with anything they can find.

Gold also works the same at any price, doesn't mean if as a gold holder, I like being charged 10% annual tax perpetually, I would definitely also try to remove that tax if it existed on gold.

In PoS, sure banks with money can buy up the currency (and enriching all the previous stakeholders in the process). I don't see how they can't do that with PoW system, they could do it much cheaper and easier, by buying up existing miners. I don't really see your argument here.

[kokojie]

Yes do explain how does VOTE have anything to do with paying extra to the dev team. Stop avoiding answering the question.

https://bitsharestalk.org/index.php?topic=10057.0
https://bitsharestalk.org/index.php?topic=10118.0

So BTSX will increase from under 2 billion to ~2.5 billion with vote taking 3% of this new "redistribution"

 As explained in the summary that delegates and the global moderator stickied:

https://bitsharestalk.org/index.php?topic=10214.0

You keep posting links to entire threads, but not answering question, stop posting thread links, just answer the question, how is this an extra pay to the dev team?? Why shouldn't vote take 3%?

[DumbFruit]

Only one thing is certain, PoW mining expense will always exist, and it is perpetual.

So? I'd rather pay that cost rather than have a central authority. Your mileage may vary.

You'll have to explain what you mean by central authority. PoS and PoW are just two methods to process transactions, PoS is actually much more distributed than PoW, since there can be no pools.

Because PoS cannot achieve distributed consensus, it will always be necessary for some central authorities to step in from time to time to decide how the blockchain ought to have behaved.

If you don't want distributed consensus, then why bother with all this nonsense? Go trade gold/silver, or use fiat.

Sure, Bitcoin developers have clout to make changes, but the last time they needed to actually fix a hard fork was because a mistake of the developers last year. Otherwise there's no intrinsic reason why a hard fork should happen, like there is with PoS.

I wonder how long the NXT boat will float once the developers walk away? Or any other PoS coin.

[kokojie]

Only one thing is certain, PoW mining expense will always exist, and it is perpetual.

So? I'd rather pay that cost rather than have a central authority. Your mileage may vary.

You'll have to explain what you mean by central authority. PoS and PoW are just two methods to process transactions, PoS is actually much more distributed than PoW, since there can be no pools.

Because PoS cannot achieve distributed consensus, it will always be necessary for some central authorities to step in from time to time to decide how the blockchain ought to have behaved.

If you don't want distributed consensus, then why bother with all this nonsense? Go trade gold/silver, or use fiat.

Sure, Bitcoin developers have clout to make changes, but the last time they needed to actually fix a hard fork was because a mistake of the developers last year. Otherwise there's no intrinsic reason why a hard fork should happen, like there is with PoS.

I wonder how long the NXT boat will float once the developers walk away? Or any other PoS coin.

No, just the contrary, Bitcoin PoW need developer to step in from time to time, Bitcoin has developer checkpointing. (though I believe there are plans to remove this in the future)
https://en.bitcoin.it/wiki/Checkpoint_Lockin

PoS coin like NxT has auto rolling checkpointing, without needing developer input. Bitshares has no checkpointing. Peercoin is removing checkpointing in the next major version.

[DumbFruit]

Bitcoin checkpointing does not have anything to do with avoiding hard forks.

[inBitweTrust]

You keep posting links, but not answering question, stop posting links, just answer the question, how is this an extra pay to the dev team?? Why shouldn't vote take 3%?

I am criticized for explaining it and than criticized for posting the evidence, huh?
I will repeat, please read my explanations this time:
 
https://bitsharestalk.org/index.php?topic=10214.0

Reasons delegates mostly approve the merger:

1) Conflict between BTSX and VOTE. ( One developer was able to leverage his time creating a competing DAC betraying what investors paid him to focus on. This is than used to motivate stakeholders and other delegates into accepting a dilution in hopes of not introducing competition. )

2) Complexity. Invictus created a clusterfuck with multiple tokens PTS/AGS/BTSX/ and multiple DACs. The merger is a hope to clean up this confusion

3) Need for capital infusion.  Invictus and developers are blowing through their IPO cash and will soon run out. Additionally, they realize they are so far behind and competition is so fierce they need a ton of capital to not get squashed with a big marketing campaign
-----------------------------------------------------------------------
Or in other words:
VOTE is a new DAC that Daniel created that would otherwise compete with BTSX. Rather than VOTE compete as an IPO against other DAC's this porposal is being pushed through and VOTE is automatically taking in 3% of 2.5 billion.  If you read through the threads on the bitshares forum you will see that that this redistribution will negatively effect  many people but overall most are in favor because of the current clusterfuck and they don't want to compete against their key developer and are desperate for money for a big marketing push.

[kokojie]

You keep posting links, but not answering question, stop posting links, just answer the question, how is this an extra pay to the dev team?? Why shouldn't vote take 3%?

I am criticized for explaining it and than criticized for posting the evidence, huh?
I will repeat, please read my explanations this time:
 
https://bitsharestalk.org/index.php?topic=10214.0

Reasons delegates mostly approve the merger:

1) Conflict between BTSX and VOTE. ( One developer was able to leverage his time creating a competing DAC betraying what investors paid him to focus on. This is than used to motivate stakeholders and other delegates into accepting a dilution in hopes of not introducing competition. )

2) Complexity. Invictus created a clusterfuck with multiple tokens PTS/AGS/BTSX/ and multiple DACs. The merger is a hope to clean up this confusion

3) Need for capital infusion.  Invictus and developers are blowing through their IPO cash and will soon run out. Additionally, they realize they are so far behind and competition is so fierce they need a ton of capital to not get squashed with a big marketing campaign
-----------------------------------------------------------------------
Or in other words:
VOTE is a new DAC that Daniel created that would otherwise compete with BTSX. Rather than VOTE compete as an IPO against other DAC's this porposal is being pushed through and VOTE is automatically taking in 3% of 2.5 billion. If you read through the threads on the bitshares forum you will see that that this redistribution will negatively effect  many people but overall most are in favor because of the current clusterfuck and they don't want to compete against their key developer and are desperate for money for a big marketing push.

I still don't understand what are you saying, are you saying VOTE's 3% is entirely paid to the dev team? because that's certainly not the case. You'll need to show me where are the "extra pay" to dev team coming from. Not just regurgitating things that I already know.

[kokojie]

Bitcoin checkpointing does not have anything to do with avoiding hard forks.

Whatever they are used for, it's manually hardcoded by developers, YES? case closed, thank you

[DumbFruit]

Bitcoin checkpointing does not have anything to do with avoiding hard forks.

Whatever they are used for, it's manually hardcoded by developers, YES? case closed, thank you

Um no. The point is specifically about Distributed Consensus, which has to do with hard forks. Because of the Nothing-at-Stake problem, PoS always runs the risk of hard forking. I'm not particularly comfortable with that.

[phillipsjk]

Bitcoin works at any price. If Bitcoin was $5000/coin, I am not sure the network would handle the resulting transaction volume. (Which is why we are looking at a hard-fork to raise the maximum block size.)

PoW solves the initial coin distribution problem. In PoS, banks with unlimited money can easily take over the currency. With PoW, banks can not simply inflate the price in order to buy up all the currency. If they do that, miners would scramble to generate new coins with anything they can find.

Gold also works the same at any price, doesn't mean if as a gold holder, I like being charged 10% annual tax perpetually, I would definitely also try to remove that tax if it existed on gold.

In PoS, sure banks with money can buy up the currency (and enriching all the previous stakeholders in the process). I don't see how they can't do that with PoW system, they could do it much cheaper and easier, by buying up existing miners. I don't really see your argument here.

During the gold rush, the supply of gold was probably increasing 10% per year. (I don't have hard figures readily available.)

For the bank thing, I was making a reference to  the [prediction] Next spike $560,000 14 months from now thread in speculation -- that prediction assumes a final Bitcoin price of $300,000.

Governments have noticed it, powerful people have noticed it, *banks* have noticed it. Right now we are in a perfect storm of the aftermath of a huge overshoot on the purchase of mining equipment - this is *fact* as evidence by the hash rate/difficulty.

This will take time to unravel. It surely will though, as irrational as people are, they will eventually stop flushing money down the mining drain. That money will turn towards the supply. As it becomes obvious the bottom is in, that is when people will start the next run up. Only this time it isn't going to be just neckbeards, redditors, hipsters and anonymous, it will be institutions. That have pretty much unlimited buying power by virtue of them essentially being able to print their own money, because they are TBTF and will just keep bankrolling each other whilst nuzzling the teat of QE washing away their toxic assets.

So the move will be unprecedented.

Unprecedented to you and I and all the other peons around here. To those behind the move, they just spent a few hundred millions to acquire assets they can now assign book values of billions. Selling into this only makes you weaker in the end game, and selling is what they want you to do because those dollars you are acquiring get more worthless the more bitcoin they have. Who here though has the constitution to hold as they see the price double repeatedly. We are still at the end of the day all hardwired for fiat. As much as anyone pretends they are not.

So the number I have picked is probably not that accurate. The magnitude, and the colossal unbeleivableness of it, is what is important. That's the black swan that nobody sees coming. That 90% of the people in the world will miss 90% of the bitcoin.

(Bold mine)