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Bitcoin's Use in Commerce Keeps Falling

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Re: Bitcoin's Use in Commerce Keeps Falling

#71

Post by salawat »

Scaevolus wrote: post #48
jstanley wrote: post #34

Earlier quoted context omitted.

> The miners will not sell for less than their electricity costs, which makes the smaller piece of the block reward they receive have a higher price. That's not how it works. If you spent $100 in electricity and you have an asset that's worth $50, you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity. Electricity cost of mining does…

More than just power, you have depreciating assets (mining chips, servers, buildings) that are effectively losing money constantly. Operating them at a small loss is better than leaving them idle for a huge loss. You see similar economics when farmers sell crops at a net loss.

Note: Farming in that manner regularly is not sustainable. Also, at a certain loss point, you might as well compost the crop back into the soil to contribute to next year's crop as fertilizer. That stuff is expensive.

Hell, the entire economy makes no guarantees at being sustainable in the long run. The unsustainability period just shows all indications of being longer than a human lifespan, thereby making it easy for people to write off as not their problem.

Re: Bitcoin's Use in Commerce Keeps Falling

#72

Post by anbende »

Scaevolus wrote: post #48
jstanley wrote: post #34

Earlier quoted context omitted.

> The miners will not sell for less than their electricity costs, which makes the smaller piece of the block reward they receive have a higher price. That's not how it works. If you spent $100 in electricity and you have an asset that's worth $50, you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity. Electricity cost of mining does…

More than just power, you have depreciating assets (mining chips, servers, buildings) that are effectively losing money constantly. Operating them at a small loss is better than leaving them idle for a huge loss. You see similar economics when farmers sell crops at a net loss.

This is only relevant if your clearing bit coins above the cost of the electricity. If not, you’re losing more turning them on than off.

Re: Bitcoin's Use in Commerce Keeps Falling

#73

Post by wgerard »

tom_ wrote: post #61
wgerard wrote: post #49

Earlier quoted context omitted.

> I use it for that purpose all the time. Not to dig into your business too much, but: Any weird tax/legal implications around that? I didn't want to dig into it too much (just because often these things are rabbit holes with unclear answers), but I'm really curious about it for the next time we have to send a payment. > In general, People in developed countries don't have a clue about how painful and time consuming…

In the UK a capital gain (or loss) may occur when you use Bitcoin to buy something, whatever that thing is. (Buying something with Bitcoin is effectively selling Bitcoin for that thing. The thing has a value, and that is some evidence that the Bitcoin is worth that much.) This is a taxable event and if the gain is large enough then you'll need to pay the tax on it. I imagine many countries have rules that are quite s…

Interesting - so wait, if I send someone in the UK bitcoin and they sell it immediately for GBP, does that count as a capital gain?

Or just if the price changes between when they receive it and convert it to GBP?

EDIT: I guess it doesn't really matter in this case since presumably short-term capital gains rate is similar (or equal) to the income tax rate, but just curious for my own sake.

Re: Bitcoin's Use in Commerce Keeps Falling

#74

Post by acdha »

jchw wrote: post #43
jonny_eh wrote: post #2

When can we call Bitcoin a failed experiment? And don't tell me it was "always about storing value", that's not in the original paper.

Not really. Was the goal of Bitcoin ever to be the successor to paper money? We're here today and Bitcoin is a functional payment network. Not only that, it's a fairly large one, and it has become a household name. I don't really use Bitcoin but I think it's hyperbole to consider it a unilateral failure just because it didn't supercede traditional currency.

It’s a household name because of speculation, however, and statistically almost nobody uses it for the kind of decentralized transactions for which it was originally pitched. The number of vendors accepting it has gone down over time (e.g. Steam, Microsoft) due to the endemic problems and many of the people who claim to use it (even here) are actually using the credit card network with government currencies for the actual transactions so there’d be very little disruption if it disappeared tomorrow.

Re: Bitcoin's Use in Commerce Keeps Falling

#75

Post by grubles »

glup wrote: post #15
KasianFranks wrote: post #7

Bitcoin (and crypto) is not a currency, commodity, stock or bond. It's a combination which makes it a completely new and different kind of asset class. It's a programmable asset that primarily serves as a 'trading vehicle' in the mind of traders and Wall St. Understanding this helps to understand why Goldman and others are stepping over themselves to setup trading desks for most crypto now and in the future.

I totally agree with the assertion that it doesn't fall into existing asset type (or-- maybe that it can move between asset types in a novel way), but what do you mean by "programmable"? Isn't the simpler explanation or enthusiasm on the part of Goldman et al. just classic FOMO?

Bitcoin uses smart contracts for its transactions. Meaning, you can program a transaction to occur if certain conditions are met. One example is a multisignature-required transaction. A multisig transaction is only valid and spendable if n-of-m signatures are present.

Re: Bitcoin's Use in Commerce Keeps Falling

#76

Post by grubles »

ttoinou wrote: post #33
andrewmcwatters wrote: post #24

Earlier quoted context omitted.

Isn’t this issue inherent in its design? If you can only have 21 million Bitcoins, the value will skyrocket until the currency is worthless.

It's more than 21 millions since bitcoins can be divided. And no, it could serve as a digital gold / long term investment, and others crypto currencies could be used for day to day transaction

Bitcoin can serve as both digital gold and cash. The Lightning Network (a network of bi-directional payment channels) supports instant sub-1-cent micropayments.

Re: Bitcoin's Use in Commerce Keeps Falling

#77

Post by lossolo »

klodolph wrote: post #66
jstanley wrote: post #34

Earlier quoted context omitted.

> The miners will not sell for less than their electricity costs, which makes the smaller piece of the block reward they receive have a higher price. That's not how it works. If you spent $100 in electricity and you have an asset that's worth $50, you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity. Electricity cost of mining does…

> That's not how it works. Obivously, the meaning of the original sentence is that miners will turn off the mining equipment when they decide that it's more profitable to leave it off than leave it on. > …you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity. This is a false dilemma, the question is not just whether you sell the coi…

> Obivously, the meaning of the original sentence is that miners will turn off the mining equipment when they decide that it's more profitable to leave it off than leave it on.

Well, it all depends on price of electricity in your region. If you mine for almost free using solar/other renewable energy/your energy is subsidized by government then you will still make profit while miners in high cost electricity regions will stop mining. If they stop mining difficulty will drop, which means you will get more money for mining.

This is self regulating mechanism, as long as bitcoin will have value it will be profitable to mine for someone.

Re: Bitcoin's Use in Commerce Keeps Falling

#78

Post by acdha »

ttoinou wrote: post #33
andrewmcwatters wrote: post #24

Earlier quoted context omitted.

Isn’t this issue inherent in its design? If you can only have 21 million Bitcoins, the value will skyrocket until the currency is worthless.

It's more than 21 millions since bitcoins can be divided. And no, it could serve as a digital gold / long term investment, and others crypto currencies could be used for day to day transaction

Given that it’s a pure fiat currency, why would it retain value if it cannot be used as a currency? The early adopters who get rich if enough people buy in want that but that’s a tiny number of people and for everyone else it’s cheaper and easier to use something which actually solves a problem.

Re: Bitcoin's Use in Commerce Keeps Falling

#79

Post by joejerryronnie »

luckydata wrote: post #50
Scaevolus wrote: post #48

Earlier quoted context omitted.

More than just power, you have depreciating assets (mining chips, servers, buildings) that are effectively losing money constantly. Operating them at a small loss is better than leaving them idle for a huge loss. You see similar economics when farmers sell crops at a net loss.

So slightly negative margins but making it up in volume?

That's how you lock up your Series A. For the next round of funding you'll need to upgrade to "large negative margins but hockey stick volume". The Saudi Sovereign Wealth Fund will accept nothing less.

Re: Bitcoin's Use in Commerce Keeps Falling

#80

Post by grubles »

jonny_eh wrote: post #2

When can we call Bitcoin a failed experiment? And don't tell me it was "always about storing value", that's not in the original paper.

Barring a catastrophic vulnerability in SHA256 or ECDSA, Bitcoin is going nowhere. Bitcoin has been a wild success. At this point, the goal is simply educating newcomers on its advantages (immutability, trustlessness, sound money).
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