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It can all go to zero

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Re: It can all go to zero

#251

Post by Cyberdog »

danhak wrote: post #198
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.

> While I fully agree that most cryptocurrencies are grossly overvalued... Could you please explain what “overvalued” even means in this context, and how one might go about determining fair value for cryptocurrency? I’ve yet to receive a straight answer on this.

"Overvalued" means "I don't think it should be worth this much" in this case.

The fair value for cryptocurrency, just as with everything else, is determined by the market(s) (at least, when it is unadulterated by government obstruction and price-fixing and such). So to determine the fair value of a bitcoin, go to the exchange of your choice and look at the price. If you don't like that price, try a different exchange. You might not want to pay that price right now, and that's okay, but that's what the fair value is right now.

Re: It can all go to zero

#252

Post by oreo81 »

em3rgent0rdr wrote: post #188
oreo81 wrote: post #163

Earlier quoted context omitted.

Governments outlawing numbers, that'll be the day.

Governments outlawing of numbers has been going on for a long time: https://en.wikipedia.org/wiki/Illegal_number

All those of those are examples of numbers that have already been discovered, not preemptively banning numbers yet to be found.

Re: It can all go to zero

#253

Post by chrisco255 »

overhang wrote: post #183
chrisco255 wrote: post #94

Earlier quoted context omitted.

To be fair, mortgages didn't all default at once. Some companies over extended themselves with subprime mortgages and that's how we got the real estate bubble. Crypto is nowhere near that, for one, very little of crypto's value comes from loaned money.

How do you know how much debt is tied to cryptocurrencies?

We don't know for sure, we only know that banks are not lending against crypto, for obvious reasons. What folks are putting on their credit cards, etc, well that is impossible to really track, but shouldn't be any different than retail sales, etc.

Re: It can all go to zero

#254

Post by Cyberdog »

saas_co_de wrote: post #229
NathanKP wrote: post #145

Earlier quoted context omitted.

Actually Bitcoin has transaction fees for exactly this purpose. The idea is that once all the coins are mined the primary way that miners make money is from the fees that people pay to miners to get their transactions recorded in the blockchain. For reference a lot of times you currently have to pay a fee of >$10 to get your transaction recorded in the blockchain, and estimates of around $10 million a day in transact…

> questionable whether fees can actually support the ecosystem right now every block pays 12.5 coins, which even with current low prices is around $145K. The average transactions per block looks like around 1,800 ( https://blockchain.info/charts/n-transactions-per-block ) which puts mining revenue per transaction at around $80, on top of which miners also get the transaction fee. With no more mining where is the othe…

> With no more mining where is the other $80 going to come from?

Are you asking where transaction fees come from?

Well, if PayPal earns $3 when I use it to send you $100, where did that $3 come from? The truth is that I sent PayPal $103, PayPal kept $3, and you got $100. (These numbers are probably not exactly correct; I don't know what PayPal's actual fees are off the top of my head.)

So the transaction fee comes from the person that made the payment.

If what you're saying is that this means that miners will be able to accumulate all the BTC… well, yes, but that's what happens now. When you buy BTC, you are buying something that, at one point or other, was initially owned by a miner. So yes, miners could bring the whole system down if they just accumulate all the BTC for themselves, but they could already do that now, and they don't - instead they trade that BTC for fiat or (nowadays, perhaps) other cryptocurrencies, so it begins to circulate to others.

Re: It can all go to zero

#255

Post by stcredzero »

fortythirteen wrote: post #168
stcredzero wrote: post #132

Earlier quoted context omitted.

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.

I think it's a natural flaw in the mining concept. Any coin that people use in a real sense will create heavy mining competition. That in turn raises the amount of computing power needed to successfully mine, meaning that transaction costs exponentially rise.

I think it's a natural flaw in the mining concept. Any coin that people use in a real sense will create heavy mining competition.

Are you sure it's not a flaw in pricing/incentive? If people are using a cryptocurrency "in a real sense" then the public blockchain ledger of a properly maintained cryptocurrency could be maintained by parties who are motivated to get their transaction done. This is not a natural flaw in the general mining concept. This is a flaw in Bitcoin's implementation of mining, due to the circumstance that most miners of Bitcoin are motivated by speculation in Bitcoin.

Re: It can all go to zero

#256

Post by Retric »

stanleydrew wrote: post #248
Retric wrote: post #157

Earlier quoted context omitted.

Depends on how you do it, you could fork the protocol and start mining from the beginning. Otherwise you would need to convince everyone to actually sell before you could mine those transactions. Often what happens after a massive price drop is people stop trading instead of a larger nominal price drop. AKA, you still get some high value beanie baby transactions, but the market is not large enough to really liquidate…

If all mining stops except for you, my understanding is that you would own all the hash power and you wouldn't need to convince anyone to sell since you could write any transaction you want to the blockchain. It seems like the harder problem is convincing anyone else to pickup mining again on the other side of your "I own all the coin" transaction block.

People could still validate if transactions are signed correctly as long as they can compare to the older block-chain. Further, people can download the full blockchain from you.

So, unless you start over there will be transactions to addresses and you need to be able to correctly sign a transaction to your own address.

PS: Think of it this way, someone mining just one block can't make an arbitrary transaction from any address to any address.

Re: It can all go to zero

#257

Post by martin1975 »

adamnemecek wrote: post #235
martin1975 wrote: post #225

Earlier quoted context omitted.

1) Bitcoin becomes too expensive to mine or even sustain due to energy prices 2) Bitcoin's blockchain grows to petabytes or exabytes in size thus becoming horrendously slow to both replicate or even host 3) Bitcoin is surpassed by a better technology, such as Cardano or IOTA. This won't kill it but it will stunt/cap its growth indefinitely. 4) Bitcoin fails to integrate into the legacy world fully by remaining pseudo…

We actually kinda agree. I'm fundamentally saying that crypto wont go away.

No legacy ever really goes away. However it slips into irrelevance unless it's built on sound foundations that can be evolved. Sad to say, no PoW currency has a sound foundation that can be expanded and evolved... like tcp/ip has been able to evolve over the last 40-50 years.

Re: It can all go to zero

#258

Post by cableshaft »

acdha wrote: post #90
cableshaft wrote: post #18

Earlier quoted context omitted.

Everything is based on faith to a certain extent. None of us (that I'm aware of) have crystal balls that see the exact future. Even companies that have lots of assets behind them could potentially make catastrophic fuck ups that tank their stock (i.e. BP and their Deepwater Horizon spill) in an instant.

Look at the BP chart: yes, it dipped but having a real business meant that it didn’t go anywhere near zero and came back up. Something based on faith can drop all the way to zero and stay there because e.g. everyone bailed to something else and there was no reason to come back.

I looked at it before I made the post. They went from $60 a share to ~$27 a share in the aftereffects of the spill. It was an example of how these companies with great assets could still lose you money due to unexpected circumstances. I'm not asserting it went to zero. They've actually recovered quite a bit, probably due to the goldfish-like memories of the general public and the moral apathy of most investors.

That's kind of my point, really. If crypto goes low enough, especially if the price is down for no good reason (i.e. it's based on a single country in the entire world cracking down on it, not because the tech stopped being useful or interesting), there will be investors who will think it's underpriced and will jump back in, which will bump the price and draw more people back in, etc etc etc. Bitcoin went through exactly this in 2013-2015. It kept dropping and dropping and dropping, all the news was terrible for it, but it never dropped to zero because there was enough people who thought it was underpriced and bought and held, waiting to see if it would go back up. And boy, if they held through last year, those people won big time.

Re: It can all go to zero

#259

Post by cableshaft »

overhang wrote: post #65
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…

Were you around a few years back to see real estate values drop from $300K to $25K? I saw that. And we are talking about a physical property. $25K is not zero, but it would be hard to distinguish the effective difference if you're leveraged $250K. So, as with any investment, if you're spending monopoly money on cryptocurrencies, scoff away. But if your retirement depends on it...

You still have a house to live in, no matter what it's worth. I've never thought you should see a house as an investment, and 2008 proved that.

I don't have monopoly money in crypto, in fact I just cashed enough out to put a downpayment on a house just yesterday (fortuitous timing), but I understand how volatile the market is and I only invest what I can afford to lose.

Honestly if crypto did lose 95% of it's value overnight, I'd still keep on buying, and just wait until the market recovered. I don't want that to happen, I'd love for it to go up forever without ever dropping, but I understand that's not a reasonable idea, especially after sitting through the last two major Bitcoin crashes.

Re: It can all go to zero

#260

Post by jen729w »

inyourtenement wrote: post #134
blhack wrote: post #79

Earlier quoted context omitted.

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".

It takes a cynical person indeed to think that Bitcoin is “a waste of time”. Love it or hate it, it’s an amazing idea.

Waste of energy, however, is harder to argue with. Hence PoS etc.

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