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As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

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Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#71

Post by jayd16 »

marcosdumay wrote: post #10
minimaxir wrote: post #6

At what price will the Bitcoin death spiral occur? (i.e. when it costs more to produce/handle Bitcoin than the revenue generated, so best move is to just exit the crypto industry).

Don't bitcoin costs adjust to a shrinking miner population as well as it adjusts for a growing one? If so, the answer is never. As people give-up, the costs for the remaining ones reduce so that at some point it's lucrative again. The interesting question is at what price people will stop speculating on its price and run to an exit? I don't think anybody can answer this one.

There are still fixed costs and opportunity costs. Even if the fixed costs are low enough that bitcoin will always be slightly profitable it still might not be profitable enough for big business to really bother.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#72

Post by JBReefer »

21 wrote: post #59
harryh wrote: post #4

Earlier quoted context omitted.

Of course if you are filthy stinking rich, it's because you participated in a distributed scam in order to defraud money from those "bandwagon shirt-losers."

You mean, like pension funds trading the stock market?

How are _pension funds_ scams?

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#73

Post by DenisM »

The most remarkable thing about BTC is diffusion of responsibility. If it was issued and marketed by a single entity the participants would be in hot water by now for violating the Securities and Exchange laws. However here we had one non-affiliated group of bigger miners issuing the coins and another group of volunteer enthusiasts hyping them up. Since the second group was not hired by the first, the first group cannot be held accountable, while the second group has agents too numerous and too small to go after.

This is similar to the housing bubble, where the industry collectively hyped up the "investment" promising huge returns, yet no one was to blame when the music stopped.

Watch out for mo ways to diffuse responsibility, that's where "action" will be. Maybe we can nip it in the bud sooner if all keep an eye out.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#74

Post by jMyles »

DenisM wrote: post #73

The most remarkable thing about BTC is diffusion of responsibility. If it was issued and marketed by a single entity the participants would be in hot water by now for violating the Securities and Exchange laws. However here we had one non-affiliated group of bigger miners issuing the coins and another group of volunteer enthusiasts hyping them up. Since the second group was not hired by the first, the first group can…

I assert that the diffusion of responsibility is a key feature of decentralized technology precisely because it renders us unable to "nip it in the bud".

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#75

Post by viraptor »

stale2002 wrote: post #45
hudon wrote: post #16

Earlier quoted context omitted.

The difference is that even if the difficulty adjusts, there will be dormant ASICs waiting to be used. If the price lowers enough and enough ASICs are out on the bench, it’ll at one point becoming economically beneficial to turn them all on and attack the network rather than having them collect dust and depreciate.

People vastly overestimate the profitability of attacking a crypto network. There are tons and tons of much smaller coins, that can be attacked for very cheap, and yet attacks are still very rare. IMO, this is because double spends just aren't a very good idea. If you tried to steal money from an exchange, everyone would know it was you doing the attack, and then they wouldn't accept your money in the future, or mayb…

> There are tons and tons of much smaller coins, that can be attacked for very cheap, and yet attacks are still very rare.

If they can be attacked cheaply, then by definition there's not much money to gain from doing that.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#76

Post by [deleted] »

jMyles wrote: post #66

The discussion of blockchain tech on HN is puzzling to me. On the matter of value: I suspect that if we find ourselves able to send a message back in time two years (when BTC was less than $1,000 USD) and report that the price is now over $3,700, that we'll find this message to be met with an understanding that this is, at least, a validation of the use of blockchain tech as a store of value. I suspect that if we des…

[deleted]

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#78

Post by gammateam »

minimaxir wrote: post #6

At what price will the Bitcoin death spiral occur? (i.e. when it costs more to produce/handle Bitcoin than the revenue generated, so best move is to just exit the crypto industry).

This happened from 2014 to mid 2016, a good 18 months.

Nothing happened. There have been bigger threats to the network, the revenue of miners isn't currently one. A threat to the usability of the network would be if 90% of mining power disappeared at the same time, this means it would take 900% longer to confirm a block until the next difficulty adjustment drops the network confirmation time back to 10 minutes. Difficulty adjustments happen every 2016 blocks, each block is supposed to come every 10 minutes. The worst case scenario would be hashrate disappearing right after a difficulty adjustment meaning 2015 blocks will be found very slowly, there could be a max of 4 months of a slower bitcoin network.

Makes me wonder what you even mean by death spiral, like what user experience do you expect to happen?

Users wouldn't immediately stop using bitcoin because it was slower, they wouldn't even know it would suck, so more likely the unconfirmed transactions would add up, and to ensure getting mined into a block, the users would increase their transaction fees to coax miners to include them first (instead of dropping their transaction completely when they run out of memory). With a higher fee market, this is an even greater incentive for miners to come back on the network, because now the block reward doesn't even matter, since the fees can potentially eclipse it totally. The price of bitcoin would even cease to matter, if there is a dollar figure of fees just there. Miners come back on the network would make the hashrate higher again, before the difficulty adjustment, making blocks confirm faster, instead of slower.

This equilibrium is already in the minds of miners, which contributes to them staying on the network so that they don't miss out.

This isn't theory, its all happened before.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#79

Post by stcredzero »

hudon wrote: post #16
marcosdumay wrote: post #10

Earlier quoted context omitted.

Don't bitcoin costs adjust to a shrinking miner population as well as it adjusts for a growing one? If so, the answer is never. As people give-up, the costs for the remaining ones reduce so that at some point it's lucrative again. The interesting question is at what price people will stop speculating on its price and run to an exit? I don't think anybody can answer this one.

The difference is that even if the difficulty adjusts, there will be dormant ASICs waiting to be used. If the price lowers enough and enough ASICs are out on the bench, it’ll at one point becoming economically beneficial to turn them all on and attack the network rather than having them collect dust and depreciate.

Couldn't the protocol be extended, such that the hash algorithm could be switched periodically, in such a way that ASICs would no longer be profitable to produce?

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#80

Post by hn_throwaway_99 »

pesmhey wrote: post #8
smacktoward wrote: post #3

Earlier quoted context omitted.

> Nobody who knows anything about anything made any kinds of plans involving $20,000 Bitcoin. Except for Goldman, Morgan Stanley, Citigroup and Barclays (see https://www.bloomberg.com/news/articles/2018-12-23/wall-stre... )...

What stops GS from replacing their fee-based offerings with a blockchain solution? Could this really be as obvious in hindsight as looking at Sears in the 90s not developing an online catalog?

> What stops GS from replacing their fee-based offerings with a blockchain solution?

What does that sentence even mean? To me this is right up there with "I'll create a GUI interface with Visual Basic and see if I can track an IP address."

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