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Bitcoin price crash forces miners off network

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Re: Bitcoin price crash forces miners off network

#31

Post by dhosek »

Melting_Harps wrote: post #13
iamaelephant wrote: post #9

Earlier quoted context omitted.

Bitcoin is fundamentally not a cash alternative. Which means definitionally the alternative to holding onto $100 BTC is NOT holding onto $100 cash. In fact cash is intentionally inflationary and BTC is intentionally deflationary (over long enough time scales) so yeah, you'd win your silly bet if there's no major crash. Doesn't mean you'll come out ahead of other strategies.

> Bitcoin is fundamentally not a cash alternative Funny, I built a fintech startup on helping the cannabis Industry from their supposed 'cash' problem(s): predominately having too much of it and not having banking, or having thier cash taken indefinitely by the bank/paypal upon closure of their account(s). While also doing B2B transactions where banks/CC companies failed to lend them services, despite having Local/St…

Because Bitcoin is inherently deflationary and there is incentive to not spend it, that pushes its purchasing power into socially/legally marginal areas of the economy. This is why it's the transactional unit of choice for online illegal drug purchases, prostitution, extortion/ransom demands, etc.

All of this of course, makes Bitcoin even more socially marginal. But yes, this is an area where Bitcoin excels for purchases.

(and to clarify, this is not to say that I personally think that drug purchases should be illegal although I have no problem with extortion demands being illegal, just pointing out the place of such transactions in the social milieu as it exists)

Re: Bitcoin price crash forces miners off network

#32

Post by api »

Melting_Harps wrote: post #5

If this is true, which I welcome because Chinese miner centralization has been a massive worry for us since about 2012, that still has yielded they highest hash rate (the computing power dedicated to mining Bitcoin) in the History of BTC: https://bitinfocharts.com/comparison/bitcoin-hashrate.html Its easy to skew this if you don't understand the underlying tech, but Bitcoin continues to work despite a supposed exodus…

That's not how economies of scale work in a price crunch. This will drive further consolidation of mining power since the largest players are the most efficient. It's the smaller indie miners that will be forced out.

When margins are squeezed only the largest vertically integrated players survive.

Re: Bitcoin price crash forces miners off network

#33

Post by iamaelephant »

tromp wrote: post #27
raiyu wrote: post #17

Earlier quoted context omitted.

The problem with bitcoin is specifically that it is deflationary. In over simplified macro economic terms when you have deflation it is in the consumers interest to not spend money, because the cost of a service or good will be lower in the future. So the longer you wait the more you save. You have the same issue with Bitcoin, because it is deflationary it is in the holder's interest to not spend it, because it's fut…

Bitcoin's supply is disinflationary, with the yearly supply inflation rate going toward 0 (and reaching it in 2140). But so is a constant emission, the major difference being that the latter goes toward 0 a lot slower, e.g. taking 50 instead of 12 years to get below 2%. More importantly, it accrues wealth to late adopters as much as to early backers, combining a fairer distribution with reduced spending aversion.

This assumes that every bitcoin ever mined stays in circulation. We know this isn't true. We know that millions of dollars of bitcoin have gone missing, never to be recovered. And if Bitcoin is the real deal (it probably isn't) then we've only just started. If this thing hangs around for decades or even centuries we will see trillions more go missing.

Re: Bitcoin price crash forces miners off network

#35

Post by dcolkitt »

Barrin92 wrote: post #15
exabrial wrote: post #12

Thank goodness. This waste of electricity and natural resources needs to go away.

it was always funny that people with a prepper mentality touted bitcoin as some sort of rock stable currency in times of crisis when government money was going to be worthless despite the fact that it basically takes an electricity source the size of the country to keep the whole thing running. What are you going to do in the post apocalypse, get a team of people with an abacus to calculate hash functions?

I'm not really a big bitcoin guy (own a few hundred dollars worth), but this seems like a straw man.

I really doubt that anyone is buying bitcoin for the collapse of industrial civilization. The more prepper-case for bitcoin comes from either very high inflation, financial instability, and/or severe capital controls. It's not implausible that these conditions coexist with the continued existence of industrial civilization.

It's not implausible because it's happened many times before in history. For example, if you were a Jew in Germany circa 1936, Bitcoin would have been very very valuable to you. In much the same that diamonds were valuable to those in that time and place, because of the ease by which they could be hidden and smuggled against the authorities' wishes.

Re: Bitcoin price crash forces miners off network

#36

Post by wmf »

dhosek wrote: post #31
Melting_Harps wrote: post #13

Earlier quoted context omitted.

> Bitcoin is fundamentally not a cash alternative Funny, I built a fintech startup on helping the cannabis Industry from their supposed 'cash' problem(s): predominately having too much of it and not having banking, or having thier cash taken indefinitely by the bank/paypal upon closure of their account(s). While also doing B2B transactions where banks/CC companies failed to lend them services, despite having Local/St…

Because Bitcoin is inherently deflationary and there is incentive to not spend it, that pushes its purchasing power into socially/legally marginal areas of the economy. This is why it's the transactional unit of choice for online illegal drug purchases, prostitution, extortion/ransom demands, etc. All of this of course, makes Bitcoin even more socially marginal. But yes, this is an area where Bitcoin excels for purch…

Illegal transactions use Bitcoin because it's irrevocable, not because of deflation. You can see that people don't shop with stablecoins either.

Re: Bitcoin price crash forces miners off network

#37

Post by samatman »

v64 wrote: post #20
behringer wrote: post #16

Earlier quoted context omitted.

I would expect bitcoin to work properly with as few as 3 people... And any computer can calculate hashes.

This is a point I see a lot of people miss about Bitcoin's power consumption. It doesn't have to use as much electricity as it does, as the difficulty is adjusted to mining capacity. The reason why so much electricity is being used on BTC is a result of an arms race between miners, not a necessity of the technical specification. Bitcoin would still operate correctly with less mining capacity. What is sacrificed is th…

Practice significantly complicates theory here.

A price crash that forces a bunch of miners off the network means that, not only is a 51% attack cheaper, but the spare capacity to launch one exists, and is just sitting there unused, losing money.

A volatile combination.

Re: Bitcoin price crash forces miners off network

#38

Post by Melting_Harps »

api wrote: post #32
Melting_Harps wrote: post #5

If this is true, which I welcome because Chinese miner centralization has been a massive worry for us since about 2012, that still has yielded they highest hash rate (the computing power dedicated to mining Bitcoin) in the History of BTC: https://bitinfocharts.com/comparison/bitcoin-hashrate.html Its easy to skew this if you don't understand the underlying tech, but Bitcoin continues to work despite a supposed exodus…

That's not how economies of scale work in a price crunch. This will drive further consolidation of mining power since the largest players are the most efficient. It's the smaller indie miners that will be forced out. When margins are squeezed only the largest vertically integrated players survive.

> When margins are squeezed only the largest vertically integrated players survive.

And yet, that's not what happened when it forked Bitmain (who may have had 70-80% of Bitcoin's hashing power at one point) was the one to take the hardest hit and essentially folded; its founder was exited and disgraced, and the company was pivoted to what seems to be primarily an AI business now [2] after that utter failure to 'prove' what you have said is accepted as 'Truth' when its not simply true when it played out in this space.

I think what many, especially those not actively working or participating in this space, seem to not understand is that Bitcoin, and to some extent cryptocurrency in general, is defying the supposed 'conventional wisdom' by just exisiting and then disproving them with these occurences.

Most of the criticisms are cherry-picked and mis-focused to react to it in a negative light--eg the ICO craze had nothing to do with Bitcoin.

After all this time I don't see any of those price drops as bad, its allowing newer participants to into this system if seen as investment, that they otherwise may have not been able to enter. And for those that were using to transact for goods/services during this volatility it may have hurt, but as someone pointed out merchant adoption is not so large that it could kill a business right now, not to mention there are ways to mitigate this with other instruments (tethered to USD and such).

Also, the thing most people don't seem to understand either is that Bitcoin mining has spurred on tons of renewable energy projects and has since migrated to that to capture said efficiencies [3] as documented by the International Energy Agency. The network is estimated to be operating on 70% renewable energy, and is growing with projects like Theil's backed bitcoin mining facility in Texas [4].

1: https://www.ccn.com/bitmain-jihan-wu-micree-zhan-stepping-do...

2: https://finance.yahoo.com/news/bitcoin-mining-giant-bitmain-...

3: https://www.iea.org/commentaries/bitcoin-energy-use-mined-th...

4: https://www.iea.org/commentaries/bitcoin-energy-use-mined-th...

Re: Bitcoin price crash forces miners off network

#39

Post by mjb »

behringer wrote: post #16
Barrin92 wrote: post #15

Earlier quoted context omitted.

it was always funny that people with a prepper mentality touted bitcoin as some sort of rock stable currency in times of crisis when government money was going to be worthless despite the fact that it basically takes an electricity source the size of the country to keep the whole thing running. What are you going to do in the post apocalypse, get a team of people with an abacus to calculate hash functions?

I would expect bitcoin to work properly with as few as 3 people... And any computer can calculate hashes.

No, that's not true. The problem isn't there protocol, it's the security argument. Bitcoin works with three people with one computer each, as long as none of those people has access to two more computers. As soon as one of the three can get three if their own computers, the chain's security arguments are broken. PoW doesn't work on compute, it works on scarcity of compute.

Re: Bitcoin price crash forces miners off network

#40

Post by mrlala »

behringer wrote: post #16
Barrin92 wrote: post #15

Earlier quoted context omitted.

it was always funny that people with a prepper mentality touted bitcoin as some sort of rock stable currency in times of crisis when government money was going to be worthless despite the fact that it basically takes an electricity source the size of the country to keep the whole thing running. What are you going to do in the post apocalypse, get a team of people with an abacus to calculate hash functions?

I would expect bitcoin to work properly with as few as 3 people... And any computer can calculate hashes.

Uh.. any single person who owns more than 50% of the computation can basically mess everything up, unless I'm mistaken?

So, maybe you mean 3 independent parties.. but what's to stop those 3 people from colluding for their own benefit, etc..

Anyway you need a hell of a lot more than 3 to run it.

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