It can all go to zero • Hacker News Board

Re: It can all go to zero

#131

Post by teraflop » Tue, Jan 16, 2018, 7:21 PM UTC

Kiro wrote: post #69

skykooler wrote: post #37

Earlier quoted context omitted.

To buy Bitcoin, a miner somewhere has to produce a block with your transaction in it. If the value of Bitcoin falls that much, it will no longer be profitable to mine. With no miners, nobody could buy or sell anything.

The difficulty will be adjusted accordingly and automatically (it's part of the protocol). Your scenario can't happen.

Sure it can happen. The difficulty is adjusted every 2016 blocks, which normally means every two weeks.

Let's say the most recent difficulty adjustment has just passed, and the total network hash power suddenly drops by a factor of two. That means each block takes twice as long to find, so now you have to wait four weeks for it to correct itself. And during those four weeks, if the hash rate continues to drop, the adjustment gets further and further away.

Basically, if hash power drops by 5% per day for a sustained period, the network can't recover fast enough.

https://en.bitcoin.it/wiki/Difficulty

Re: It can all go to zero

#132

Post by stcredzero » Tue, Jan 16, 2018, 7:22 PM UTC

fortythirteen wrote: post #70

stcredzero wrote: post #36

Earlier quoted context omitted.

Too overpriced to use for any reasonable purchase Could one have a cryptocurrency which is always subdividable? Are there any which already have this feature?

It's about transaction fees and computing power. The cost of powering the computers that verify transactions has to be covered.

That's a serious design flaw. "It can do it, but it's just too expensive for anyone to afford to do it," is a design failure condition.

Re: It can all go to zero

#133

Post by JumpCrisscross » Tue, Jan 16, 2018, 7:22 PM UTC

singularity2001 wrote: post #123

Retric wrote: post #108

Earlier quoted context omitted.

If people stop mining it then you can't buy it. Remember, with the current design if hash power suddenly drops enough then the network just stops.

Wow so it can you drop to zero in a very real sense before it even drops to say $40?!?

> Wow so it can you drop to zero in a very real sense before it even drops to say $40?!?

Markets crash discontinuously. It was trading at one hundred, it was trading at one hundred, it was trading at 99, it was trading at 2. Go on GDAX and look at the order book. Lots of demand priced close together at the top of the book. As you go down, the bids are further apart.

As a first-order approximation, that's a decent view into what would happen if a massive bought of selling hit the exchange.

Re: It can all go to zero

#134

Post by inyourtenement » Tue, Jan 16, 2018, 7:22 PM UTC

blhack wrote: post #79

mattbrewsbytes wrote: post #71

Earlier quoted context omitted.

Comparing cryptocurrencies to actual companies isn't fair. A lot of companies that went bankrupt (aka worth $0) had assets. Those assets were worth something and were probably sold off and used to pay debtors. What assets does a cryptocurrency have? What value is actually there?

It's also not fair because a company can actually "go away" as in they sell the building and stop operating. You can't really do this with bitcoin. It's never going to "shut down".

If everybody woke up at once, came to their senses, and realized bitcoin was all just a waste of time and literal energy, and turned off their machines, bitcoin would be "shut down".

Re: It can all go to zero

#135

Post by tlrobinson » Tue, Jan 16, 2018, 7:23 PM UTC

singularity2001 wrote: post #123

Retric wrote: post #108

Earlier quoted context omitted.

If people stop mining it then you can't buy it. Remember, with the current design if hash power suddenly drops enough then the network just stops.

Wow so it can you drop to zero in a very real sense before it even drops to say $40?!?

In that case a majority of users would likely agree to a hard fork that adjusts the difficulty.

Some people would probably argue it's no longer "Bitcoin" at that point, but at least you'd still hold coins that have some value.

Re: It can all go to zero

#136

Post by starlust2 » Tue, Jan 16, 2018, 7:23 PM UTC

tessierashpool wrote: post #64

cableshaft wrote: post #39

Earlier quoted context omitted.

Well that's why it's common knowledge in the stock market to diversify your portfolio, and they call it a portfolio, not a single stock, and why so many people invest in mutuals. There's not an equivalent to mutuals in the cryptoverse yet, but there will be. I've made quite a few small bets on various alts. I'm taking the black swan approach to them. Quite a few could drop to zero in a couple years but I'm betting at…

There's not an equivalent to mutuals in the cryptoverse yet, but there will be. Working equivalents already exist.

At this point crypto mutual funds don't really make sense. They all fall and rise together for the most part.

Re: It can all go to zero

#137

Post by [deleted] » Tue, Jan 16, 2018, 7:23 PM UTC

FLUX-YOU wrote: post #102

surrey-fringe wrote: post #44

I've been thinking of starting a Medium account lately. All I have to do is wait for something bad to happen in crypto and give a first grade interpretation of events and compare them to some money movie I saw recently. I don't need to understand anything about crypto, and I can feel superior to all my friends who aren't working because they made money.

>All I have to do is wait for something bad to happen in crypto and give a first grade interpretation of events and compare them to some money movie I saw recently. Stock analysts have been doing this forever, and probably pays better than medium.

[deleted]

Re: It can all go to zero

#138

Post by [deleted] » Tue, Jan 16, 2018, 7:24 PM UTC

cableshaft wrote: post #9

So many people love to parrot the 'It'll go down to zero!' line, especially if they don't have skin in the game, but there's pretty much no way. Specific cryptocurrencies, sure they could potentially go to zero. I'm watching one right now that's looking pretty darn close. But this entire industry? I don't think so. It's too late for that. Too many players, too much ease of access, too much of the potential has been d…

[deleted]

Re: It can all go to zero

#139

Post by roywiggins » Tue, Jan 16, 2018, 7:24 PM UTC

saas_co_de wrote: post #126

aitrean wrote: post #33

Time for the monthly cryptocurrency panic thread. While I fully agree that most cryptocurrencies are grossly overvalued, these articles always pretend a 20% selloff is the beginning of the end, when, in crypto land, 20% selloffs are a pretty standard bad day for the market.

The way I understand it bitcoin is guaranteed to go to zero by design because there is a fixed limit on issue and so eventually there will be no incentive to mine and the network will collapse.

The plan is that transaction fees will incentivize mining after all the bitcoins have been minted.

Re: It can all go to zero

#140

Post by flush » Tue, Jan 16, 2018, 7:25 PM UTC

saas_co_de wrote: post #126

aitrean wrote: post #33

Time for the monthly cryptocurrency panic thread. While I fully agree that most cryptocurrencies are grossly overvalued, these articles always pretend a 20% selloff is the beginning of the end, when, in crypto land, 20% selloffs are a pretty standard bad day for the market.

The way I understand it bitcoin is guaranteed to go to zero by design because there is a fixed limit on issue and so eventually there will be no incentive to mine and the network will collapse.

You understand wrong. And are naive to think that such a simplistic flaw would not be considered by the substantial number of intelligent programmers involved in the Bitcoin project.

The transaction fees on the network are incentives for miners to pass transactions in addition to block rewards.