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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

#341

Post by ianai »

dkersten wrote: post #298
ianai wrote: post #285

Earlier quoted context omitted.

I often wonder about this. How liquid are these coins? Ie if it’s a currency then converting every single coin to cash should result in no change to the conversion rate. If exchanging x coin to cash will net about the going rate, but ax results in dramatically less than a*conversion rate then it’s not a currency. If the difference is even further diminished it challenges the notion of it as a store of value. Edit-Thi…

> if it’s a currency then converting every single coin to cash should result in no change to the conversion rate Is that how it works for currency? I would think that if people tried to sell every single Euro for USD, the conversion rate would absolutely change.

I did try to find a metric for what I was referring to here. It seems to be a number not easily found out about bitcoin. The size of the daily forex trading was around $6.6 trillion in 2019 - see my original comment for comparison.

Realistically, I was thinking of trading cash for cash of one nationality- which absolutely wouldn't change the face denominated. Kind of tautological and not as helpful. Probably testing whether bitcoin to usd acts similarly to another foreign currency to usd may be a useful metric.

But why do people exchange international currencies? So some are just forex traders performing intraday arbitrage. But the real/biggest use of it is to exchange goods across national borders. That's a use which cannot exist with the cryptos in quite the same way. Even if a nation adopts a crypto like bitcoin as its currency it does not have the same function as a currency backed by that government since bitcoin is controlled by other people - see the nber article referenced here.

Edit - my main point remains about the exchange elasticity of crypto to usd/a national currency. If the exchange rate changes rapidly with the number of crypto exchanged then it's not very liquid, by definition, and not storing value nor acting like a currency.

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

#342

Post by FabHK »

mateuszf wrote: post #280
FabHK wrote: post #237

Earlier quoted context omitted.

Sure they can. There's a line in the code halving the codebase mining reward every 210,000 blocks. Just comment that line out (or replace halving with doubling). Done.

That would create a fork that nobody would use (because bitcoin holders are incentivised by the halving mechanism).

> a fork that nobody would use

Except the "small group controlling 90%" of mining power that introduced that change (in the hypothetical example) would use it. And their chain would grow longer and be the canonical one (though that, of course, is also just a convention encoded in the code). And they could still spend some 20% or so of their hash power to entirely mess up the one true chain, if they so desired.

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

#343

Post by argentinian »

nuerow wrote: post #339
argentinian wrote: post #336

Earlier quoted context omitted.

> This is in fact one of the often ignored aspects of inflation, as well as taxes: a way to mitigate or avoid concentrations of wealth detrimental to society. As somebody living in Argentina, a country with usual double digit inflation, your argument is complete bullshit. Here the wealthy are not affected by inflation: they can save in real state, strong currencies, shares... And the same rich families stay rich for…

> As somebody living in Argentina, a country with usual double digit inflation, your argument is complete bullshit. The only bullshit I spot is this idea to use Argentina, or Zimbabwe or Venezuela, as the posterchild of responsible monetary and economic policies, when they are actually the result of gross and perpetual mismanagement. https://www.wsj.com/articles/why-argentina-faces-an-economic... Meanwhile most of th…

I agree, the inflation here is the effect of the perpetual and gross mismanagement.

What about your idea regarding inflation as a way to avoid concentrations of wealth? (the idea I quoted and I replied to). That one is unsustainable.

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

#344

Post by ur-whale »

mensetmanusman wrote: post #332
Siira wrote: post #310

Earlier quoted context omitted.

“Hoarding” money, also known as saving in esoteric circles.

The funny thing is that death or mental illness by a hoarder means the btc go poof until the end of time. Therefore, over a long enough time scale, the number of available BTC tends towards zero.

That's assuming that BTC's aren't infinitely divisible.

Currently, you can only chop them up into atoms worth 1e-8 BTC (satoshis), but there isn't much that needs be changed in the code and the protocol to get that to much finer grained.

Therefore, it's unlikely that there will ever be zero bitcoins.

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

#345

Post by FabHK »

fsflover wrote: post #289
worrycue wrote: post #271

Earlier quoted context omitted.

They can but generally they don’t allow inflation to exceed 3% - ideally keeping it with 1-3% - as the destruction of the currency is not worth it long term.

So with USD, you trust that people care about long term consequences over short-term profit? With bitcoin, you trust math.

> With bitcoin, you trust math.

No, you trust the 50 miners that control the majority of the hash power not to mess with the code that embodies your math (or doesn't, as the case may be).

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

#346

Post by gitfan86 »

somethoughts wrote: post #125
Hermel wrote: post #109

Earlier quoted context omitted.

The top 1000 investors hold 15% of the supply? That’s not “highly centralized” if you compare to the stock market. For Tesla, one single shareholder holds 17% of the whole company.

There seem to be a lot of similarities between crypto and growth stocks that are held by founders with > 15% ownership. Similar to early stage investors who have essentially zero cost basis, early BTC holders have zero cost basis when BTC was pennies each versus late stage current investors paying in at $60,000 for each BTC. For early BTC holders its easy to diamond hand. There are a lot of similarities for sure betw…

The big difference between BTC and MSFT/TSLA is that successful companies have cash flow. MSFT has a dividend that it pays out every year. TSLA is eliminating debt and adding cash to its balance sheet.

If everyone stopped buying BTC and only held BTC and bought another crypto currency, BTC would go to zero since no one would be putting money in. Similar to a pyramid scheme, once there is no new money it collapses.

On the other hand, if investors decided to never buy MSFT again and sold their stock the price could go down a lot, but it couldn't go to zero because that would make the dividend yield go to infinity. If MSFT went down to $20/share it would yield over 10% a year, and it is absurd to think that no one would want to get 10% a year return.

Obviously companies can and do go bankrupt, but for this comparison I'm comparing successful crypto to successful companies.

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

#347

Post by fsflover »

nuerow wrote: post #339
argentinian wrote: post #336

Earlier quoted context omitted.

> This is in fact one of the often ignored aspects of inflation, as well as taxes: a way to mitigate or avoid concentrations of wealth detrimental to society. As somebody living in Argentina, a country with usual double digit inflation, your argument is complete bullshit. Here the wealthy are not affected by inflation: they can save in real state, strong currencies, shares... And the same rich families stay rich for…

> As somebody living in Argentina, a country with usual double digit inflation, your argument is complete bullshit. The only bullshit I spot is this idea to use Argentina, or Zimbabwe or Venezuela, as the posterchild of responsible monetary and economic policies, when they are actually the result of gross and perpetual mismanagement. https://www.wsj.com/articles/why-argentina-faces-an-economic... Meanwhile most of th…

And you are sure that the US government will never, ever mismanage anything?

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

#348

Post by gitfan86 »

toofy wrote: post #335
throw0101a wrote: post #308

Earlier quoted context omitted.

> Could you imagine what a clusterfuck the market would be with no regulations? Generally regulations are written after clusterfucks have occurred to reduce the risk of them happening again. It's the same reason we have building codes: after a Great Fire or two happens in a given city, fire breaks are usually mandated.

Absolutely. This is why in the digital currency realm we’ll absolutely see a repeat of many the exact same grifts over and over again that we’ve already gone through and already figured out how to mitigate. But we’ll just fall for them all over again. It’s amazing to me how many times we’re repeating the same mistakes over and over again that we’ve made in the relatively recent past because “it’ll be different this t…

It is the same reason you still see banner adds with a beautiful woman saying that she is looking for a hookup in your town. Also the reason we have lottery tickets and casinos and pyramid schemes. People logically know it is risky, but they want to give it a chance just in case this time is different.

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

#349

Post by sumedh »

qeternity wrote: post #217
krageon wrote: post #209

Earlier quoted context omitted.

> highly regulated Regulated by them, so in practice not all that regulated

Please elaborate. Which regulations do you think are missing?

You dont go to jail when you are a big fish and break the law

https://en.wikipedia.org/wiki/Steve_Cohen_(businessman)

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

#350

Post by Craighead »

qeternity wrote: post #299
krageon wrote: post #274

Earlier quoted context omitted.

The original capital is not taxed, capital gains is.

Where do you think the original capital came from? When you buy shares of AAPL, you paid ordinary rates on income which you used to buy the shares.

Don't debate cryptists, they fundamentally incorrectly believe their imaginary money is better than other imaginary money for Reasons(tm) and you'll be met with nothing other than fallacies on their arguments.
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