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Bitcoin crashes over 25% in 24 hours, under $180

bitcoinity.org

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Re: Bitcoin crashes over 25% in 24 hours, under $180

#311

Post by mikeash »

celticninja wrote: post #303
mikeash wrote: post #279

Earlier quoted context omitted.

The higher the GH the more secure the network. The lower the cost per GH the less secure the network. These two will generally cancel out.

Not necessarily. You cannot magic GH into existence. Merely wanting it does not mean you can get it. So the higher the GH the more secure the network, lower the cost of GH and the bad actor and good actor are competing for the same product. The good actor requires less GH to continue to be a good actor than a bad actor requires to become a bad actor. If the bad actor does not mange to obtain 51% of the network hash p…

Thinking about it more, the problem is that there's currently no link between the amount of money allocated to Bitcoin security and the actual need for it.

There's some efficient amount of money to spend on security, and markets will generally aim for that amount, even if they don't necessarily hit it exactly. In the version of Bitcoin where the mining reward is negligible and miners are mostly paid with transaction fees, it should happen there as well. But the mining reward is currently substantial, which greatly over-allocates resources to security.

Add that in to the fact that Bitcoin mining has huge externalities in many parts of the world, due to the fact that electricity is often produced by burning coal, and coal externalities are poorly accounted for, and you have a big problem. Or rather, you would have a big problem if Bitcoin were big enough to matter.

Re: Bitcoin crashes over 25% in 24 hours, under $180

#312

Post by salibhai »

ekianjo wrote: post #116
facepalm wrote: post #86

Earlier quoted context omitted.

Actually I find the problem of stashing gold very tricky. A bank vault seems like a bad idea because of the history when the government seized the gold and people weren't allowed to open their bank safes without a policeman. Hiding it at home seems risky because of burglaries. I haven't found a solution yet, that's why I don't own any gold. With bitcoin, at least I can spread the risk, like putting a part of the "sec…

> Actually I find the problem of stashing gold very tricky. This, and plus the fact that in almost every country on Earth now, buying Gold needs an ID of some sort so that governments know exactly where to look for Gold the day they want to seize it. I think one of the last places where you can buy Gold anonymously is Switzerland. EDIT: and you have to trust that the Gold you buy is real. There's always the risk it's…

They sell gold on ebay and in most jewelry stores you can buy 24k jewelry which is almost pure

Re: Bitcoin crashes over 25% in 24 hours, under $180

#313

Post by oco101 »

tribaal wrote: post #10

Yeah, as much as I like the concept of bitcoin (and the blockchain), I don't see adoption becoming anything more than anecdotal. No interest rate, and you have to secure it yourself? No thanks. My "big bad bank" guarantees me at least a small interest in saving money, and if my card is stolen, I get a new one in 24 hours and all transactions are cancelled. I'm happy to pay some transaction fees ("extortion!") to get…

There are already amazing solutions there in the cryptocurency that gives you interested on your money and has a stable value and much more. The vision behind Bitcoin changed the word this vision give us all hope, but the fact is Bitcoin today has many problems. Instead of trying to fix those things and keep the vision that Bitcoin implemented,alive We try to defend Bitcoin no matter how obvious are its flaws... You can't even mention other blockchain solution you gonna get killed by bitcoin fanboys. We are stuck still defending AltaVista against Google is really sad ... Until this will stop, Bitcoin will continue to fail and drag with it the whole blokchain industry, but it only a matter of time because what's important it the vision that Satoshi gave us NOT who's gonna deliver on it...

Re: Bitcoin crashes over 25% in 24 hours, under $180

#314

Post by jasonisalive »

tptacek wrote: post #272
jasonisalive wrote: post #167

Earlier quoted context omitted.

Checklocktime + multisig + the reputable third-party arbitrage provider of your choice, if you want.

So, "you don't".

Um, actually you do. The principal differences are:

1) You can choose your arbitrage provider independent of your payment channel (whereas with Visa/Mastercard you are locked into the arbitrage facility of the payment channel) -> splitting off a feature into a modular component -> more competition among providers -> better products.

2) The arbitrage provider only holds a m-of-n key to confirm your transaction, so they don't hold your funds, so they cannot steal them (directly, obviously they could collude with the intended recipient of the funds, but that's by and by).

3) You can set arbitrary values for how many m-of-n signatures you want and for checklocktime. So you can customise the arbitrage arrangement to suit the transaction far more than any offering from V/MC.

Finally, let's not forget that if you really are desperate to keep that classic chargeback commerce experience, there is nothing to stop V/MC rebuilding their system on top of BTC and offering the same package. The current "chargeback" system isn't really a "chargeback" anyway, it's more of a "failure to pay funds that your bank provider agreed to display as pending."

Re: Bitcoin crashes over 25% in 24 hours, under $180

#315

Post by brudgers »

celticninja wrote: post #301
brudgers wrote: post #250

Earlier quoted context omitted.

The bailout was done with fiat currency. There is no fiat energy.

This is a pretty dumb comment. The costs associated with bitcoin come down to power and hosting costs, the costs of banking can be huge, difficult to verify and can lead to consumers losing money that banks hold. No one loses bitcoins when a bitcoin miner goes broke or shuts down.

We are in agreement. Bitcoin is pegged to energy price, as was noted in the top comment. Energy prices are down. Currencies largely pegged to energy prices, such as the ruble are also down.

On the converse the cost of the bailout is pegged to the price of money. Fiat lowers that cost via inflation. The surplus currency created by the bailout is reflected in low interest rates.

The key is that money is more fungible than energy. Buying energy and converting it into bitcoin is likely to be inefficient when the market reaches equilibrium. As a value store, nobody wants rubles when they try to cash out.

Re: Bitcoin crashes over 25% in 24 hours, under $180

#316

Post by TheDong »

tlrobinson wrote: post #246
TheDong wrote: post #139

Earlier quoted context omitted.

Yes, bitcoin mining would be worse. Provably worse. As computers get better, traditional applications, like databases, perform better and you can either serve more customers, use cheaper (and often more efficient hardware), or do nothing and use your outdated hardware. With bitcoin, your enemy is not the performance of the raw work you are doing (you can hash better), but the fact that everyone else also has these in…

but suddenly the hash-rate is 1000 times more and the energy consumption is 100 times more. Not really. Eventually electricity will dominate mining costs, not hardware, and people will only invest in more efficient hardware, not cheaper hardware. The total cost of the electricity used in mining will never exceed the total value of the block rewards plus transaction fees, since miners would rather stop mining than min…

This is not completely true. There's one other reason to mine than the reward: because you recognize the risk of a hostile entity controlling too much mining power.

If you have 300 BTC and you suspect someone else is almost able to mount a 51% attack and thus devalue all your BTC, it makes logical sense for you to put more money into mining, even more than you can gain from the combination of block rewards and electricity, to secure your existing investment. As you do that, others will be forced to as well to avoid you having too much power and to protect their BTC and so on....

Re: Bitcoin crashes over 25% in 24 hours, under $180

#317

Post by moe »

tzs wrote: post #306
moe wrote: post #270

Earlier quoted context omitted.

Hm... ok, guess I'll quote myself again then too...: Since you know there is no Chargeback mechanism wouldn't it be wise to demand product/service first or use an escrow service? What part of "Bitcoin is not a credit card, do not treat it like a credit card" is so hard to understand? Yes, if you send coins to some address which might belong to a scammer then those coins might be lost. Duh. You can now complain all da…

You seem to have lost track of why we are talking about this. Let's recap. Someone said the Bitcoin obsoletes the entire business practice of Visa and MC. I pointed out chargebacks as something Visa and MC do that is not reasonably supported by Bitcoin, with the implication that chargeback support is a feature of Visa and MC that consumers find attractive, and hence Bitcoin does not obsolete credit cards. So yes, you…

I'm frankly tired of this now and will just leave this comic here:

http://www.icanbarelydraw.com/comic/comics/2014-01-27-40-mil...

Re: Bitcoin crashes over 25% in 24 hours, under $180

#318

Post by nickik »

EricBlair wrote: post #185
nickik wrote: post #44

Earlier quoted context omitted.

Its very easy to imagen a case where you lend your bitcoins to some institution, the problem is that there is not yet any investment in the bitcoin system.

Oh look, that already exists... https://btcjam.com https://www.bitbond.com https://bitlendingclub.com and probably a dozen more. As for no investment in the bitcoin system... just something in the news about that everyday. And I thought the previous guy with his savings account paying 2% above inflation was funny.

I have not looked on the site, my point was really that it not a bitcoin problem but economic one.

Re: Bitcoin crashes over 25% in 24 hours, under $180

#319

Post by illuminate »

facepalm wrote: post #86
hueving wrote: post #13

Earlier quoted context omitted.

>Bitcoin is the electronic version of "let's buy a lot of gold and stash it somewhere". It's even worse than that because normal people at least have a decent idea of when their gold is secure. A non-techie just has to trust that the online bitcoin provider or author of the wallet is doing what he/she really says and in a secure fashion.

Actually I find the problem of stashing gold very tricky. A bank vault seems like a bad idea because of the history when the government seized the gold and people weren't allowed to open their bank safes without a policeman. Hiding it at home seems risky because of burglaries. I haven't found a solution yet, that's why I don't own any gold. With bitcoin, at least I can spread the risk, like putting a part of the "sec…

"A bank vault seems like a bad idea because of the history when the government seized the gold and people weren't allowed to open their bank safes without a policeman."

You've got bigger issues at that point.

Re: Bitcoin crashes over 25% in 24 hours, under $180

#320

Post by TheDong »

mikeash wrote: post #311
celticninja wrote: post #303

Earlier quoted context omitted.

Not necessarily. You cannot magic GH into existence. Merely wanting it does not mean you can get it. So the higher the GH the more secure the network, lower the cost of GH and the bad actor and good actor are competing for the same product. The good actor requires less GH to continue to be a good actor than a bad actor requires to become a bad actor. If the bad actor does not mange to obtain 51% of the network hash p…

Thinking about it more, the problem is that there's currently no link between the amount of money allocated to Bitcoin security and the actual need for it. There's some efficient amount of money to spend on security, and markets will generally aim for that amount, even if they don't necessarily hit it exactly. In the version of Bitcoin where the mining reward is negligible and miners are mostly paid with transaction…

You say "there's some efficient amount of money to spend on security, and markets will aim for that amount ... will happen with negligible mining reward" I think is false. See comment: https://news.ycombinator.com/item?id=8887085

I would say the upper bound on the amount of energy someone will spend on BTC is roughly the cost of (prestige of mounting a 51% attack) + (BTC market cap of one individual). If people allocate resources to BTC efficiently then one rogue person will just mount an attack and take over the network for the combination of prestige and fortune. Any person with large BTC wealth will want to have more security to protect his investment appropriately, and your security against said attacks is buying more hashing power. The fact that over time hardware becomes cheaper just means it's a constant losing battle.

Other markets that allocate money to security I think can reach an efficient amount because the system they're protecting does not, as a core part of it, require you to have more processing power than your user's / people you transact with. The two security models are so drastically different I don't think a comparison can be made. Perhaps the closest comparison is password hashing where it's good practice to increase difficulty over time to slow down attacks, but with 2FA and lockouts after N attempts, you actually don't need to allocate significant resources there.

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