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Bitcoin is a disaster

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Re: Bitcoin is a disaster

#891

Post by jpmattia »

anonisko wrote: post #507
jpmattia wrote: post #422

Earlier quoted context omitted.

> Early adopters weren't enthusiastic about bitcoin because they hoped it would end fractional reserve banking Just to amplify your point: There is a weird idea that that monetary multiplication (like fractional-reserve banking) is not possible with bitcoin. However, anytime someone lends bitcoin or shorts it on an exchange, they increase the bitcoin in circulation past the base count of 21 million btc (or however ma…

Isn't the fundamental difference here that we can't print more bitcoin to bail out bad investments? Yeah, you can lend out bitcoin and even do fractional reserves, but ultimately, the bill must come due and over leveraged bad bets will get wiped out and good bets get rewarded. Contrast this to the current environment where we are constantly bailing out and even financially rewarding business and investment failures,…

> Isn't the fundamental difference here that we can't print more bitcoin to bail out bad investments?

Absolutely. (Although it's "a" difference, not "the" difference.)

> you can lend out bitcoin and even do fractional reserves, but ultimately, the bill must come due and over leveraged bad bets will get wiped out and good bets get rewarded.

Yes, and the subeconomy of bitcoin investing has a very different risk profile. As an example: I mentioned in another comment, the exchanges are already doing fractional reserves in spades. Bitmex has an insurance fund, and there has been at least one occasion where liquidation could not be covered by the traders and then exhausted the insurance fund. What happened then? The insurance fund paid out pro-rata on the successful bets (the successful traders made less than they should have") and much grousing ensued.

So it's the rough equivalent of an old-fashioned bank run, but tempers lessened because some money was made and nobody was zeroed out (other than the losing bets who should have gone negative but were only zeroed out).

Re: Bitcoin is a disaster

#892

Post by easton »

ur-whale wrote: post #705
Fti wrote: post #661

Earlier quoted context omitted.

Check out Stellar, it’s been created for that, Faster than bitcoin and really lows fees.

>Check out Stellar Great idea given that they're next on the SEC's list once they're done tearing Ripple a new one.

That stinks, given that their technology actually made crypto viable for everyday transactions.

Re: Bitcoin is a disaster

#893

Post by loeg »

ryanianian wrote: post #78
loeg wrote: post #30

Earlier quoted context omitted.

I mean: https://www.google.com/search?q=bitcoin+mining+using+stolen+... The first four links for me are: * 13 arrested for stealing $3million of electricity to mine BTC (China) * Illegal Crypto Miner Caught After Stealing More Than $400k [in electricity] (Russia) * Bulgarian Electricity Company Unveils Details of Historic Power Theft [it's Bitcoin miners] * Bitcoin mining operators steal $1.5 million in electricity (…

Those articles point out that the governments stopped it rather than enabling it for considerable periods of time. You probably have to pay off a police officer when you're climbing the tower, but I don't see any cases where corruption at wide scale was involved. The articles point out the value of the electricity stolen but not the gained profit. E.g., what percentage of BTC was mined with stolen electricity based o…

> ... rather than enabling it for considerable periods of time.

The $3 million example from China was operational for over 2 years.

> The articles point out the value of the electricity stolen but not the gained profit.

Sure. Random internet source says average Chinese industrial electricity is $0.084/kWh. So that's approx. 36 million kWh total, or average 1.4 million kWh/month (1.4 GWh/mo) during their operation.

> E.g., what percentage of BTC was mined with stolen electricity based on the cases we've found so far?

https://digiconomist.net/bitcoin-energy-consumption/ for Mar 2017 through May 2019 estimates global BTC energy consumption at 10 TWh/yr (830 GWh/mo) minimum to 73 TWh/yr (6,100 GWh/mo) maximum. Absolute lower bounds are 3.4 TWh/yr-60TWh/yr (280-5000 GWh/mo).

So, making some hand-wavy assumptions that they did not scale their operation over time, or reduce mining if prices fell, and that their ASICs were approximately as good as everyone else's, they were anywhere from 0.2%-0.5% (early 2017) to 0.02-0.03% (2018 peak) of global BTC energy consumption.

Per https://www.blockchain.com/charts/total-bitcoins the number of BTC in circulation rose from 16.193M to 17.728M (= ~1.535M) coins during that time. Just as rough bounds, 0.02% would be 307 coins and 0.5% would be 7675 coins.

https://www.coindesk.com/price/bitcoin price in Mar 2017 was ~$1200 USD, peaking in 2018 at $19,000, and $8,700 in May 2019. I don't have a weighted average for that period, but I'd approximate the average price over the period as roughly $5k. So: our extreme low estimate of 307 coins, sold immediately on mining, yields revenue of $1.5 million (on $3mil stolen electricity). On the high end, $38 million in revenue. Probably they made something in between.

> If only a vanishingly small amount of BTC was mined with stolen electricity

That is just the one operation, which got caught. It doesn't include any other illegal operations which got caught, and it does not include illegal operations which have not been caught. 0.5% is small, but significant. 0.02% is maybe less so.

This estimate of percent-BTC-produced-with-unpaid-electricity doesn't include legal operations that went bankrupt and will not be able to pay what they owe to the local utility. (There was a lot of this after the 2018 boom-crash.)

> then the rest of the argument kind of falls apart.

I don't really agree. The incentives here are all terrible and will encourage more of this going forward, especially with BTC prices astronomical again.

(1) Burn as much electricity as possible. This is just bad for society and the world.

(2) Acquire electricity as cheaply as possible. In the absence of theft, this encourages consuming electricity in locales that do not price carbon production externalities into electricity costs. Obviously, theft makes electricity even less expensive.

(3) Maaaybe you can take your stolen profits and run, because BTC is pseudonymous and freshly mined coins aren't connected to real world identities. This encourages illegal operations.

Thanks for reading :-).

Re: Bitcoin is a disaster

#894

Post by jimmaswell »

graeme wrote: post #755
jimmaswell wrote: post #670

Earlier quoted context omitted.

The IRS issued official guidance on it but there's no need for new laws around it.

That’s the point! Bitcoin didn’t bend the world to its will. Whereas ridesharing forced legalization of ridesharing.

You could argue its popularity has prevented governments from regulating against it as hard as they would have liked to.

Re: Bitcoin is a disaster

#895

Post by wpietri »

StanislavPetrov wrote: post #874
firekvz wrote: post #590

Earlier quoted context omitted.

Bitcoin adoption in venezuela is Absolutely fake/nonexistant Bitcoin is only used as a bridge for exchange VES:USD a.k.a money laundering from corruption and drugs, with some remittances transactions caught in the middle of those laundry waves. there is absolutely 0 adoption for bitcoin in Venezuela, Im a bitcoin enthusiast since 2011 and I hold bitcoin and I live in Caracas (capital) and move around all tech communi…

>Bitcoin adoption in venezuela is Absolutely fake/nonexistant This is completely and absolutely false. I personally know hundreds of (mostly very poor) Venezuelans who absolutely depend on bitcoin and other crypto currencies to survive. The people I'm personally familiar with eke out a few dollars creating content on platforms like Hive and Steemit, trade their alt crypto for bitcoin, pool it crypto together, and hav…

You personally know hundreds of people there? That seems like quite a lot. How did you meet them?

Also, I'm not sure I'd call that significant Bitcoin adoption if their only use for it is as an intermediary to exit a different cryptocurrency.

Re: Bitcoin is a disaster

#896

Post by wpietri »

firekvz wrote: post #590
LatteLazy wrote: post #408

Earlier quoted context omitted.

I'm not OP. I looked and Chainalytics claim Venezuela is world number 3 in bitcoin use. But it's not clear what they're basing that on. My (very limited) understanding is that they can't directly see the country of origin of a bitcoin transaction. So they must be relying on figures from exchanges or apps? https://blog.chainalysis.com/reports/venezuela-cryptocurrenc... Does anyone know if you can tell country of origi…

Bitcoin adoption in venezuela is Absolutely fake/nonexistant Bitcoin is only used as a bridge for exchange VES:USD a.k.a money laundering from corruption and drugs, with some remittances transactions caught in the middle of those laundry waves. there is absolutely 0 adoption for bitcoin in Venezuela, Im a bitcoin enthusiast since 2011 and I hold bitcoin and I live in Caracas (capital) and move around all tech communi…

Thanks for this. Given the level of ungrounded Bitcoin hype that's always going on, I'm not surprised to hear it. Once again, Bitcoin turns out to be mainly useful for light financial crime.

Re: Bitcoin is a disaster

#897

Post by ashtonkem »

ric2b wrote: post #862
ashtonkem wrote: post #727

Earlier quoted context omitted.

You’re kind of sidestepping my point. Yes, it’s a good idea to keep your coins off the exchange, for all the reasons you’ve provided. The issue is that keeping your money off exchange is far less convenient, which is exactly why most people keep their couns on exchanges despite the risks. If the Bitcoin community in general wants people to stop getting hacked on exchanges, they need to provide more convenient alterna…

If some people like to leave their house unlocked because it's convenient it's not my duty to make them a more convenient door lock, it's quite enough to warn them about the dangers and let them make their own decisions. It's not like using a wallet is hard or inconvenient, it's just an extra step, like reaching for your keys before entering your house. But there can certainly be a business opportunity there, sure.

This is exactly my point. To you it seems so easy, you have no idea why others don’t do it. Yet the fact that others aren’t doing it enough implies that it isn’t easy for everyone else, which is why the repeated advice given to non-techies isn’t working.

Re: Bitcoin is a disaster

#898

Post by luizparreira »

biolurker1 wrote: post #877
luizparreira wrote: post #869

Earlier quoted context omitted.

Thats a good question. PIX is directly tied to your bank account, so I imagine if your bank decides to ban your account, you won't be able to use PIX through that account/bank anymore. But, I suppose you could open another account in another bank, move your previous PIX keys to it or create new ones.

Not how it works.. One banks bans you and you are screwed for life. That's the value proposition of bitcoin

Oh, didn't know that. Can you point out where it says that? From what I understand of PIX, it is tied to your transactional bank account. If you have multiple bank accounts and you are banned by one bank, your account on the other banks are not automatically banned and you can still transact with it, I would imagine PIX would still work.

Re: Bitcoin is a disaster

#899

Post by arcticbull »

ric2b wrote: post #848
arcticbull wrote: post #810

Earlier quoted context omitted.

Truthfully? There's no good answer, period. The government needs to be replaced. This is the false promise of bitcoin. As long as the government needs to be replaced you have much bigger problems than the currency. As soon as the government is replaced, you no longer have to worry about the currency. Bitcoin always has been, and always will be, a solution in search of a problem. Forget Venezuela for a second and ask…

How is the USD helping the North Koreans? No one claimed that Bitcoin is useful in NK so I don't get the point of the question.

The point is that yes, an authoritarian government can definitely just shut down bitcoin, so authoritarian government resistance is not a feature of bitcoin.

Re: Bitcoin is a disaster

#900

Post by arcticbull »

Andrew_nenakhov wrote: post #887
arcticbull wrote: post #880

Earlier quoted context omitted.

Yes of course it's the risky investment. BTC has seen 3 drawdowns of -86% in the last couple of years, and also, what happened to XRP shows that the football can be deflated in seconds with the right SEC memo. Currency isn't an investment. Currency has never been an investment. You're not supposed to hold currency. You're supposed to use currency to buy assets. A spot exchange rate means absolutely nothing. This is E…

Is gold an asset or a currency? Now it is definitely the former, but throughout history it was mostly an asset and a currency, with rather vague lines between them. Bitcoin is not a USD replacement. It's more of a gold replacement: finite supply, great malleability, but with modern benefits regarding storage and transfer.

> Bitcoin is not a USD replacement. It's more of a gold replacement: finite supply, great malleability, but with modern benefits regarding storage and transfer.

This is an opinion that Bitcoin advocates throw out every time someone criticizes Bitcoin's ability to be a currency. As soon as someone criticizes its ability to be an asset, someone trots out that its actually been a currency this whole time. It's bad at both.

It's bad at both in no small part because it tries to bring back the asset-backed currency approach, which was dreadful last time around, and that's why it was ended.

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