Reminder: Instability? Yes, bitcoin is a ponzi and will collapse. Learn how the investment fraud works. [1] [1]: https://github.com/openblockchains/bitcoin-ponzi
"Needing new buyers for price to increase is not the definition of a Ponzi scheme"
On the Instability of Bitcoin Without the Block Reward [pdf]
111–120 of 232 posts
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#112One of the assumptions the authors make in this paper is that miners can turn their hardware on and off quickly, and that they will benefit financially for doing so. Mainly by paying lower electricity bills. It turns out the really big miners don't pay for electricity the same way you or I do. Big miners sign long term contracts for continuous consumption of energy, and don't save any money for turning mining hardwar…
>It turns out the really big miners don't pay for electricity the same way you or I do. Big miners sign long term contracts for continuous consumption of energy, and don't save any money for turning mining hardware off for a short duration.
Really? Those contracts don't let them resell the unused electricity at (some fraction of) the spot price?
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#113Earlier quoted context omitted.
So people living in countries without a stable currency due to hyperinflation don't count as a real use case? It's sometimes the only way they can secure their capital. I think that we need to think outside of our elitist western bubble more often. Not all people live in a stable democracy with (semi-)stable currencies.
But for them there are better alternatives to BTC, one being BCH for example
BCH is trending to 0 in BTC. How does this solve Venezuelans or Lebanese store of value problem?
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#114One of the assumptions the authors make in this paper is that miners can turn their hardware on and off quickly, and that they will benefit financially for doing so. Mainly by paying lower electricity bills. It turns out the really big miners don't pay for electricity the same way you or I do. Big miners sign long term contracts for continuous consumption of energy, and don't save any money for turning mining hardwar…
Very unlikely it will be turned off, the miners could still keep mining other coins while mining bitcoin blocks even if there is no BTC reward. See "merged mining" https://blog.bitmex.com/the-growth-of-bitcoin-merge-mining/ .
This is a good point that the authors don't touch on. There are many coins secured by sha256 and I'm sure many more will come along before BTC finishes it's release schedule.
Switching to any one of them is likely to provide more revenue than just attacking the network for a little extra transaction fee money.
This is one of those times it's really useful to make a distinction between bitcoin the currency and bitcoin the protocol. If it was the authors intention to describe a future problem on the BTC network then they messed up by not addressing the rest of the sha256 mining ecosystem. However, if it was their intention to describe a problem with the protocol itself then it kind of makes sense to not touch on miner's alternatives.
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#115Earlier quoted context omitted.
BTC isn't a stable currency in case you haven't noticed. Do you actually have evidence of BTC being used as currency in any of these dysfunctional countries you talk about or is it just a supposition that you're making?
https://www.theguardian.com/technology/2016/dec/16/venezuela...
The article you linked to is from 2016 so I found something more recent: https://www.coindesk.com/bitcoin-adoption-venezuela-research
The article I linked to is from crypto folks, so caveat emptor.
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#116Earlier quoted context omitted.
I don’t think individual transactions are meaningfully tied to an energy cost.
Why can’t you estimate the power consumption of the whole network and divide it by the number of transactions per second?
You can. But it is not a good metric. Assuming the difficulty adjustments ramp down you could still mine blocks with a couple of raspberry pis.
The energy consumption and capital investment in hardware is Bitcoins security model. As it would require you to put in the same amount of HW and energy to subvert the mining process. Probably we are at a point that this is almost impossible other than a state actor or a global conspiracy.
The block size increase/decrease is also tied to security. There are latency implications as well as the fact that some nodes might drop of if you increased the block size.
In both cases it comes back to security rather than the transactional throughput. I am a huge proponent but still kind of struggle with the idea of how much resources this thing sucks up. But then again if it truly becomes the worlds ledger for wealth preservation... idk ... might be worth it.
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#117Earlier quoted context omitted.
But for them there are better alternatives to BTC, one being BCH for example
And even if they do use BTC (they don't really, at least in Africa, i don't know about Venezuela), they do not trade using BTC but a second layer anyway.
This is either an uninformed or misleading take.
It isn't necessarily "Africa" or "Americas".
The heuristic is "is my local fiat shitcoin stealing my purchasing power".
Counter to your claim and easily provable with a basic search Nigeria is one of, if not the leading in BTC adoption %.
https://www.msn.com/en-us/money/news/nigeria-is-the-second-l...
https://www.statista.com/statistics/1194735/bitcoin-online-s...
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#118This is the first interesting paper I see here on HN about Bitcoin. While many people think that Bitcoin's energy usage is too high, I honestly hope that it's high enough to deter a nation state sized attacker. Many Bitcoiners argue that miner rewards shouldn't decrease more, but at the same time it's too late to change the concensus on it.
Maybe we need a heavy Carbon Tax on Proof of Work cryptocurrencies. Using the energy consumption of Argentina to verify financial transactions does not fit with moving to a Net Zero economy.
It would be really tough to enforce for the bigger ones. You can mine a block without revealing your location. You only need a connection to the internet through a vpn. It would be a game of whack-a-mole for enforcers.
It's a good idea though.
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#119Earlier quoted context omitted.
But for them there are better alternatives to BTC, one being BCH for example
BCH is trending to 0 in BTC. How does this solve Venezuelans or Lebanese store of value problem? https://www.tradingview.com/symbols/BCHBTC/
Yet they just passed BTC's daily transaction volume (regularly) . Like it or not, BCH is about to eat BTC's lunch and good for them. They've earned it.
Re: On the Instability of Bitcoin Without the Block Reward [pdf]
#120Earlier quoted context omitted.
I read this comment with interest, thanks for sharing. Makes good sense to me. If I may ask, do you think the distribution of bitcoin will be somewhat equitable as we approach 2140? And do you you think it will actually become a medium of exchange as originally hoped? Or will it remain a store of wealth only (as things currently seem to indicate)? And if it indeed remains only a store of wealth, will said wealth be d…
It's impossible to predict the future. If everyone holds bitcoin as a store of value then the value should drop as it's not being used for anything one would think. I believe the best outcome is that people start using bitcoin for every day purchases and the hope is that by 2140 the price is relatively stable. Most likely there will be many large holders as there are with real money. However, someone could maybe do a…
Or maybe there's a foreseen flaw in bitcoin.
It's based on public-key cryptography which can be broken by quantum computers. Those don't exist yet (at least not in any form relevant to cryptography in practise), but I think they will by 2140.