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Bitcoin is largely controlled by a small group of investors and miners

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Re: Bitcoin is largely controlled by a small group of investors and miners

#41

Post by neaanopri »

ceilingcorner wrote: post #39

> the top 10,000 individual Bitcoin investors control roughly one third of the cryptocurrency in circulation. The relevant comparison here is to other currencies, not to organizations in general, and to the ability and incentive of these controllers to influence the trajectory of the currency. Two points: 1. 10,000 people controlling 33% is dramatically less control and centralization than the Federal Reserve, which…

The federal reserve exists at the pleasure of Congress, and Congress can abolish the fed if it chooses to.

Re: Bitcoin is largely controlled by a small group of investors and miners

#42

Post by ur-whale »

graeme wrote: post #24
ofou wrote: post #13

How much does it cost the sum of all BTC mining?

Easy to calculate. Assuming an efficient mining market, yearly costs are 900 * 365 * price of bitcoin. 900 is the number of new coins mined per day. At current market price, $60,000, bitcoin costs $19.7 billion USD. Or, 13x Tesla’s famous investment. You’d need a Tesla sized investment every month for a year just to balance sell pressure from miners. This is without any existing investor cashing out. And this scales…

You're assuming miners are sellers.

They could very well be HODLErs buying at a huge discount.

Re: Bitcoin is largely controlled by a small group of investors and miners

#44

Post by matteotom »

ajkdhcb2 wrote: post #31
jayd16 wrote: post #22

Earlier quoted context omitted.

In what way do users have control over miners or developers? If the assumption is that corruption can overcome a democratic state, I never understood why its so crazy to suggest it can overcome developers or a mining cartel.

Developers are wasting their time if nobody wants to use what they develop. Miners lose their income if they are mining blocks on a chain that nobody wants to use. Users running software nodes validates the blocks, limiting what miners can do. Miners can be pushed to change the rules with methods like a 'User Activated Soft Fork'. The proof of work algorithm can even be changed, rendering all the ASIC hardware of the…

Corrupt governments and central banks can be pushed to change the rules with methods like "voting" or "mass protests".

Re: Bitcoin is largely controlled by a small group of investors and miners

#45

Post by jimmydorry »

jayd16 wrote: post #22
ajkdhcb2 wrote: post #19

Users, miners and developers all have different powers and hold each other to account in an interesting way that few people understand so far, affecting what 'control' really means. It needs to be put in context with alternatives. Compared to the alternative of corrupt governments that have complete control to print money at will, I have no doubt that it is a extremely promising experiment. ASICs do seem to pervert s…

In what way do users have control over miners or developers? If the assumption is that corruption can overcome a democratic state, I never understood why its so crazy to suggest it can overcome developers or a mining cartel.

Corrupt states have a monopoly on violence. There is no such similar force ensuring people have to use the crypto made available to them. The Bitcoin network operates by balancing the economic incentives of each party, and at any point, any party is free to walk away.

__Developers:__

* Profit motive: Paid salaries / bounties / donations by users, business that build off the Blockchain, miners, and appreciation from their BTC holdings

* The consequence of all the core developers going rogue would be the price of BTC collapsing, salaries or donations no longer getting paid by either or all of the above groups

__Miners:__

* Profit motive: Appreciation of BTC holdings, income derrived from doing their job by validating transactions and appending them to the blockchain for the block reward and transaction fees

* Rogue miners can't exert much force on the system until they get close to 50% of the hashing power.

* A collective of miners (e.g. a mining pool) can negatively impact the ecosystem by buying developers, or messing with transactions. This would result in a large cost by way of their holdings losing value and no longer being able to derrive as much income from mining.

__Users:__

* Profit motive: Transacting and speculating with BTC gives it value. If a significant group of users dislike a developer's proposed changes or feels they are corrupt, they can make their voice heard which can force the miners and other developers to weigh in resolve the issue. If this does not happen, then the loss of confidence in Bitcoin can result in a fork (the troublemakers leaving the chain, or the majority / active users moving to a new coin and leaving the troublemakers behind).

No one party in the above can force any issue on the other two stakeholders, and doing so against all economic incentives will typically cause enough damage that none of the other actors would likely go along with such an act.

For example, the main active developers could get bought off and push out a client with 10GB transaction blocks. Assuming the miners also get bought off, the users can choose not to use such cyrpto and sell their coins while they can still get a decent value for them. The miners and developers would be king of their fiefdom, which means very little. This is only possible though if you treat the miners and developers each as a single entity. This is far from the case though.

Re: Bitcoin is largely controlled by a small group of investors and miners

#46

Post by goldenkey »

neaanopri wrote: post #41
ceilingcorner wrote: post #39

> the top 10,000 individual Bitcoin investors control roughly one third of the cryptocurrency in circulation. The relevant comparison here is to other currencies, not to organizations in general, and to the ability and incentive of these controllers to influence the trajectory of the currency. Two points: 1. 10,000 people controlling 33% is dramatically less control and centralization than the Federal Reserve, which…

The federal reserve exists at the pleasure of Congress, and Congress can abolish the fed if it chooses to.

Something something JFK's head blown off.

Re: Bitcoin is largely controlled by a small group of investors and miners

#47

Post by sunshinerag »

matteotom wrote: post #44
ajkdhcb2 wrote: post #31

Earlier quoted context omitted.

Developers are wasting their time if nobody wants to use what they develop. Miners lose their income if they are mining blocks on a chain that nobody wants to use. Users running software nodes validates the blocks, limiting what miners can do. Miners can be pushed to change the rules with methods like a 'User Activated Soft Fork'. The proof of work algorithm can even be changed, rendering all the ASIC hardware of the…

Corrupt governments and central banks can be pushed to change the rules with methods like "voting" or "mass protests".

Except corrupt governments and central banks do not care for either. Central bank policies are not subject to voting by people. Did any of us vote for bailouts, QE?. corrupt governments also know how to suppress "mass protests". If these are the only ways to hold them to account how would that work.

Re: Bitcoin is largely controlled by a small group of investors and miners

#48

Post by graeme »

fastball wrote: post #29
graeme wrote: post #24

Earlier quoted context omitted.

Easy to calculate. Assuming an efficient mining market, yearly costs are 900 * 365 * price of bitcoin. 900 is the number of new coins mined per day. At current market price, $60,000, bitcoin costs $19.7 billion USD. Or, 13x Tesla’s famous investment. You’d need a Tesla sized investment every month for a year just to balance sell pressure from miners. This is without any existing investor cashing out. And this scales…

There are only 2,144,500 BTC left to mine. That's 6.5 years at a 900 per day rate.

Yeah the halvings slow it. Every four years the rate halves. We’re 2.5-3 years away from next one.

Then 450, 225, 112.25 etc

Re: Bitcoin is largely controlled by a small group of investors and miners

#49

Post by wmf »

jayd16 wrote: post #22
ajkdhcb2 wrote: post #19

Users, miners and developers all have different powers and hold each other to account in an interesting way that few people understand so far, affecting what 'control' really means. It needs to be put in context with alternatives. Compared to the alternative of corrupt governments that have complete control to print money at will, I have no doubt that it is a extremely promising experiment. ASICs do seem to pervert s…

In what way do users have control over miners or developers? If the assumption is that corruption can overcome a democratic state, I never understood why its so crazy to suggest it can overcome developers or a mining cartel.

Users have the money. If there's a fork, users can value one side higher than the other and then developers and miners will follow the money.

Re: Bitcoin is largely controlled by a small group of investors and miners

#50

Post by nightski »

matteotom wrote: post #40
nightski wrote: post #35

Earlier quoted context omitted.

Gold trades something like $183 BN per day. U.S. Equities something like $240 BN per day. These are very rough figures. But Bitcoin is worldwide and I don't see how you are hung up on $1B / day. Bitcoin volume in the past 24 hours was actually $36 BN.

It's not about volume, but that to support a certain price bitcoin needs $x/day net inflow. To support $1M bitcoin, the market would need ~$1B/day of new money buying into bitcoin (at least for the next few years until the next reward halving).

It's precisely about volume, because that shows us that ~$1B/day of new money buying into bitcoin is already happening (actually $36/BN a day since for every seller - which includes miners btw - there is a buyer). Since the price has been going up, that means demand has been even exceeding supply lately.
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