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$130B wiped off crypto markets in 24 hours

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Re: $130B wiped off crypto markets in 24 hours

#211

Post by eli »

matheusmoreira wrote: post #205
hn_throwaway_99 wrote: post #146

Earlier quoted context omitted.

The thing about Bitcoin specifically, though, is that there are only really 2 possible outcomes: 1. The world decides it's "tulips" at some point, and the value goes to 0. 2. The world decides it will be a major part of the financial system, and it goes to 500k or 1 million. Basically, anything in between is just a probability calculation of whether it will end up at one end or the other. The problem with this, thoug…

> The amount of electricity needed to protect the network is directly tied to the price of BTC. Why? I keep seeing this claim and it makes no sense to me.

I assume because the higher the price the greater the incentive for one entity to take over 51% of the network and start stealing transactions.

Re: $130B wiped off crypto markets in 24 hours

#212

Post by pclmulqdq »

asimpletune wrote: post #181
hn_throwaway_99 wrote: post #146

Earlier quoted context omitted.

The thing about Bitcoin specifically, though, is that there are only really 2 possible outcomes: 1. The world decides it's "tulips" at some point, and the value goes to 0. 2. The world decides it will be a major part of the financial system, and it goes to 500k or 1 million. Basically, anything in between is just a probability calculation of whether it will end up at one end or the other. The problem with this, thoug…

I could be wrong about this, but I don't know if the energy requirements have anything to do with the price (I.e. demand) for the coin, does it? I was under the impression that the problems that you have to solve get predictably more difficult, and they're more of a function of time than price. But yes, with your point overall I agree, like in 10 years or something it doesn't seem workable without major changes. Wasn…

You have it a bit backwards: the energy demand has to do with the price of the coin. You can look at mining calculators to see what the relationship is between kWh and coins today, and some have historical charts. This relationship is baked in to the "difficulty" of the mining function and the block reward - higher difficulty means more hashes per block which means more watts per coin. In turn, your power company charges you per kWh, and in an efficient market, you are going to expand operations until your marginal cost (the cost of power) is equal to marginal profit (profit from selling the coins you mine). Generally, bitcoin mining has been done in such a way that if you have access to power at 5-10c per kWh, you can mine profitably (not including the cost of a mining rig).

As the block reward goes down (and it is dropping), the rewards of mining also drop, so you have a reasonable argument that the power use is transitory until the block reward goes to 0. However, it looks like this may end up being made up with transaction fees because the transaction throughput of bitcoin is also really low.

Lightning and other solutions are supposed to fix the transaction throughput, but they have limitations.

Re: $130B wiped off crypto markets in 24 hours

#214

Post by danaris »

eli wrote: post #206
hn_throwaway_99 wrote: post #146

Earlier quoted context omitted.

The thing about Bitcoin specifically, though, is that there are only really 2 possible outcomes: 1. The world decides it's "tulips" at some point, and the value goes to 0. 2. The world decides it will be a major part of the financial system, and it goes to 500k or 1 million. Basically, anything in between is just a probability calculation of whether it will end up at one end or the other. The problem with this, thoug…

Couldn't you say that about basically anything? That it will eventually be really big or go away? Seems to me like bitcoin could keep seesawing on the fringes of relevance for a while. And people still buy tulips and beanie babies, albeit not anywhere near the prices at their height.

But that's because tulips and beanie babies have inherent value.

Tulips are pretty flowers.

Beanie babies are cute toys that you can play with.

Bitcoin is a purely virtual financial instrument. It has no purpose other than to be worth money.

Re: $130B wiped off crypto markets in 24 hours

#215

Post by UncleMeat »

Demiurge wrote: post #163
wruza wrote: post #138

Earlier quoted context omitted.

HODL equals to BUY. Would you? I bought^ some of these recent days dips and sold on bounce, but now it’s just too scary. If you look at NASDAQ, it is much more appealing. ^ No, I’m not a desperate idiot, I’m just testing my feelings in trading in general on $1k, to stay calm and not act crazy in a real investment situation

No, it doesn't. HODL equals "hold". "Buy" means make an active decision to buy, hold means make a passive not to make a decision.

Money is fungible. There is no rational difference between "continue to hold X BTC that I already own" and "buy X BTC today when I currently own 0 BTC."

Re: $130B wiped off crypto markets in 24 hours

#216

Post by soared »

CryptoPunk wrote: post #188
streamofdigits wrote: post #116

There is no much point in arguing with a cult. This phenomenon will have to work its way through the susceptible demographic, meaning that the large majority of "speculators" will have transferred their disposable wealth to a minority of shrewd operators. The masses will subsequently be "seasoned", or immunized and will no longer participate, at best disappointed, disgusted and mildly embarrassed, at worst suffering…

I have no idea what future crypto prices will do, but you do realize that smart contracts allow people to bank, from their browser with nothing but a MetaMask extension, without a bank, right? There's heavy dose of speculation present in any emerging market, but crypto, especially its smart contract sector, is not just speculation.

A digital wallet that can trade isn’t banking though. Can you direct deposit, pay rent, be fdic insured, etc with that solution?

Re: $130B wiped off crypto markets in 24 hours

#217

Post by lukifer »

hn_throwaway_99 wrote: post #146
skrebbel wrote: post #19

I own no crypto and I think it's a ridiculous piece of hype, but I think all that reporting (and, on twitter, all that schadenfreude) about bitcoin (etc) going down is nonsense. If you look at a 5 year chart of the BTC value, it's still super insane high and it's been going down hard once before (summer 2021). If I were a crypto fan I'd just tweet HODL like every previous time.

The thing about Bitcoin specifically, though, is that there are only really 2 possible outcomes: 1. The world decides it's "tulips" at some point, and the value goes to 0. 2. The world decides it will be a major part of the financial system, and it goes to 500k or 1 million. Basically, anything in between is just a probability calculation of whether it will end up at one end or the other. The problem with this, thoug…

I think it's functionally impossible for Bitcoin to hit literal zero. It could someday run on a network of ten hipster tech-history enthusiasts, worth micro-pennies like DOGE in the early days, but it still wouldn't hit zero.

I agree that Proof of Work has a severe scaling problem; which is why I expect Proof of Stake to outcompete PoW (a token with lower transaction costs being inherently more desirable as a store of value). AFAICT PoS scales linearly: as the market cap goes up, the opportunity cost of locking tokens, and the mining rewards, both go up proportionally. It'll be interesting to see if BTC maxi culture sees the writing on the wall, or sticks to their guns to the bitter end; even if they're right that it's a better security model (I'm doubtful), it wouldn't be the first time that "good enough" won the market.

I suppose the biggest reason that we'll never see PoW vanish completely, even if carbon-taxed or outlawed by most states, is the massive capital outlay in ASIC mining hardware, which literally has no other use. There'll always be a desire to recoup that investment, and an incentive to foster "true believers" to maintain demand.

Re: $130B wiped off crypto markets in 24 hours

#218

Post by tobrien6 »

zarzavat wrote: post #204
hn_throwaway_99 wrote: post #146

Earlier quoted context omitted.

The thing about Bitcoin specifically, though, is that there are only really 2 possible outcomes: 1. The world decides it's "tulips" at some point, and the value goes to 0. 2. The world decides it will be a major part of the financial system, and it goes to 500k or 1 million. Basically, anything in between is just a probability calculation of whether it will end up at one end or the other. The problem with this, thoug…

> The amount of electricity needed to protect the network is directly tied to the price of BTC This is not how proof of work functions. Hash rate and price are not directly related, they are somewhat correlated because when the price goes up it becomes more profitable to mine. Bitcoin doesn't need more hash rate for the price to go up - the price is the independent variable and the hash rate is the dependent variable…

Truth. Parent comment is deeply misinformed. BTC already has more than enough hash rate, and it is entirely independent of price.

Re: $130B wiped off crypto markets in 24 hours

#219

Post by darkwater »

matheusmoreira wrote: post #190
darkwater wrote: post #155

Earlier quoted context omitted.

Your "unfortunately" part is the whole point of what GGP was saying.

It's not useless though. It works just fine as a currency. It's just that nobody is using it. Like how Signal is more trustworthy than WhatsApp but nobody I know uses it so it doesn't matter.

Sadly currencies rely on network effects even more than instant messengers to be really useful. The fact that most people look at cryptocurrencies just like they were stocks and comparing against a buying/selling price in USD should be pretty clear. I know that people also invest in currencies and gain money on exchange fluctuations but it's more a "side effect" than the main purpose. With cryptocurrencies is the other way round instead.

Re: $130B wiped off crypto markets in 24 hours

#220

Post by Fnoord »

samarama wrote: post #122
dtech wrote: post #100

Earlier quoted context omitted.

Bitcoin and other cryptocurrencies have ~zero inherent value, due to their non-speculation use-cases like payment being very limited or still early development (smart contracts). Unless you count BTC in black market I guess. USD has inherent value, it's the only currency where you can pay taxes in, and if you want to do business with government or government employees - who are ever only paid in USD - you must accept…

Bitcoin’s inherent value is 1. Immutability 2. Limited supply 3. Censorship-resistance 4. Independence of governments, nations, banks, institutions, corporations 5. Accessibility You can also pay your taxes in crypto in many countries. The dollar’s inherent value is very weak and not really tangible. It’s 2022 and people still don’t get that.

You forget to mention the cost of Bitcoin and other cryptocurrencies. The cost of electricity, the environment. The cost of securing your assets. I can guarantee you, if a clever goon comes across you in the middle of the night in Amsterdam, and they know you got cryptocurrency assets with you, they'll get them off you (que XKCD ref. of what happens when you get coerced to give away your private key). And I bet they'll be able to smell the hipsters from miles away. Oh wait, these don't frolic around in those neighborhoods in Amsterdam. Cause stuff there goes via (small amounts of) cash, mainly.

Independence, you are very much dependent on the internet, miners, etc. Yes, you can use the tool to avoid detection of a nefarious state actor. But you'd be breaking the local law, willingly and knowingly. That's a risk. At one point, police are going to recognize these sweet 'lil Ledger and Trezor hardware wallets. Furthermore, if a large local economy would collapse, like say in my case EUR, it'd take Bitcoin with it. I admit, it makes sense to avoid currency in small economies in crook countries, but you're choosing for your own benefit instead of the state you live in.

Accessibility, since a lot of people use mobile smartphones, they cannot sync the blockchain to it. Many are dependent on third party like exchanges. Hardly independent of corporations.

Immutability, you can lose your private key and be done with it. If I lose my bank card, I can disable it and just get a new one. With NFTs, these depend on a third party resource. Which depends on USD or EUR or whatever in order to be paid. These also depend on authority of whoever made the blockchain or smart contract.

You didn't mention anonymity, because Bitcoin isn't. Yes, it takes effort, but it can be anonymized. The reason it supposedly doesn't happen is 1) if you are investigator and know a vulnerability to do so, you're best to keep it private for reuse 2) you apply parallel construction instead. But specialists who can do this exist. Its just that they're expensive, so they only go after big fish not Pablo who sends some Bitcoin from El Salvador to USA.

> You can also pay your taxes in crypto in many countries.

(It is called cryptocurrency, not crypto, but yes you can recognize cryptocurrency proponents by the way they call their asset.)

No, I cannot, as Bitcoin is not a currency. I have to pay my tax in EUR.

> It’s 2022 and people still don’t get that.

This kind of straw man is useless.

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