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U.S. Secret Service Launches Cryptocurrency Awareness Hub

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Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#151

Post by barnabee »

SketchySeaBeast wrote: post #139
dataangel wrote: post #119

Earlier quoted context omitted.

Satoshi actually had a theory for Bitcoin pricing. He thought it would behave like gold, where over the long run the price converges to the cost of mining it. The cost to run the miners is a floor on the price, because if miners mine unprofitably eventually they go bankrupt.

So, assuming it's around that long, what happens in 2140? Infinite value?

Miners still receive it from transaction fees, so no. Although the economics of keeping the network secure in the face of no new bitcoin being created and many txns happening in side chains or rollups (or not happening at all) are untested.

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#152

Post by SilasX »

mlac wrote: post #87
xibalba wrote: post #54

Earlier quoted context omitted.

How is crypto a systemic risk? From my recollection of the 2008/09 financial crisis, systemic risks were those in which entities were deeply intertwined with one another on a massive scale, such that there failure would potentially bring down the entire system of finance. We're talking: retail banking (payments, savings, lending), commercial banking (idk?), public debt markets (bigco and gov funding), but most especi…

When that much money goes “poof”, it’s going to have real world consequences. And the people who are going to get burned are the last ones on the bus - the least technical, the ones who think it will make them rich, the ones who can’t afford it.

Yes, but the parent's point (and my concern as well) is that "market crash" does not necessarily mean widespread fallout (e.g. Black Monday in '87); that only happens when the losers are tightly coupled to other critical parts of the economy, which isn't necessarily the case here: GS/JP Morgan won't have to default on loans to critical counterparties in a crypto crash, for example.

Any time a big group loses wealth all at once, there's some consequence, but that's not the same as "systemic risk" where it causes catastrophe in areas not directly related.

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#153

Post by thebean11 »

ianai wrote: post #82
lawn wrote: post #68

Earlier quoted context omitted.

Nothing much honestly. Mining in Bitcoin (and the other cryptos) adapter to the amount of miners, and will still produce a similar amount of coins and work as normal. Sure, there are extreme cases like if a very significant amount of miners would suddenly stop, then the blocks would come in at a much reduced rate until the algorithm adapts itself. And if too many stops mining though, then the chain becomes too easy t…

I did use the word “significant” in my original question. The following reply to this question makes it sound pretty dire: https://www.quora.com/What-if-everyone-stop-mining-Bitcoin

During the crash in 2017 mining decreased drastically, I want to say by like 70%? There were slow blocks for a while then difficulty adjusted.

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#154

Post by willturman »

nightski wrote: post #117
AlexandrB wrote: post #78

Earlier quoted context omitted.

> One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment? Most other assets represent ownership of... something. A company, a commodity, property. Cryptocurrency is closest to either a fiat currency without the government backing that typically tries to stabilize those. Or to more exotic and abstract financia…

This is just one person's opinion, but even with PE ratios, profitability, or any financial statement you can read determining the value of a company's stock (not the same as the company itself) is almost as hard as bitcoin. If you can reliably price a stock based on any measure of company value then you could be very rich very fast. There is a reason they say don't stock pick just buy an index fund and hold.

A share of stock is a fraction of the cash flow of a company. A share represents a tangible thing which can valued according to any number of mechanisms.

Cryptocurrencies represent nothing but transactions and the ledger of those transactions (which they are exceedingly wasteful and clumsy at achieving).

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#155

Post by toss1 »

dataangel wrote: post #119
AlexandrB wrote: post #78

Earlier quoted context omitted.

> One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment? Most other assets represent ownership of... something. A company, a commodity, property. Cryptocurrency is closest to either a fiat currency without the government backing that typically tries to stabilize those. Or to more exotic and abstract financia…

Satoshi actually had a theory for Bitcoin pricing. He thought it would behave like gold, where over the long run the price converges to the cost of mining it. The cost to run the miners is a floor on the price, because if miners mine unprofitably eventually they go bankrupt.

Hmmm, thinking out loud...

That means that the total cost of all the mining divided by the outstanding value of BTC should approximate the floor.

Except when it doesn't. When it becomes unprofitable to mine, all of the miners turn off their machines, and the network dies, it'll go to zero.

Complicating factor is the miners who have free electricity, e.g., setup hooked up to their own solar farm or natgas flare. For them, the cost of mining is the capital investment over their output, so they'd keep their machines running as marginal cost of new energy is essentially zero, but the employees to keep it running? If we're down to very few mining machines running, how quickly does the difficulty scale downwards — fast enough to keep it running?

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#156

Post by sowbug »

AlexandrB wrote: post #78
nrzd wrote: post #52

I’m blown away by how anti-crypto this discussion is. I hadn’t realized how negative the prevailing sentiment is on Hacker News. One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment? If you truly believe that cryptocurrency is the basis for a superior economic system, isn’t it rational and wise to put some…

> One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment? Most other assets represent ownership of... something. A company, a commodity, property. Cryptocurrency is closest to either a fiat currency without the government backing that typically tries to stabilize those. Or to more exotic and abstract financia…

> human sentiment - a very fickle input

Ordinary accounting principles already have a concept for this: goodwill. If a business's valuation exceeds the net of its tangible assets minus liabilities, then that intangible asset is called goodwill.

Goodwill is neither a strange concept nor inapplicable to virtual currencies/assets. Instagram's value as a business entity (yes, I know it's owned by Meta) clearly exceeds the value of the source code, real estate, office furnishings, accounts receivable, etc. A competitor could duplicate everything Instagram does, but the competitor wouldn't be as valuable as Instagram. That difference in value is goodwill. In the tech industry, where we give new names to old things, we call it network effects. The Instagram network is an intangible asset that has real value, which you can't derive solely from Instagram's tangible assets. That company had to build a product and become extremely lucky that it caught on and became popular. Instagram is valuable because its users think it's valuable. If you aren't an Instagram user, you probably don't see its benefit and might have trouble understanding why it's a $XX billion business entity.

Same with successful virtual currencies and assets: they're valuable because of the network effects. Bitcoin is valuable because its users think it's valuable. That's true of any valuable network, and it's true of Bitcoin.

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#157

Post by aqme28 »

meragrin_ wrote: post #134
aqme28 wrote: post #96

Earlier quoted context omitted.

> Basically what's missing is the ability to even guess at the "true" value of cryptocurrency. There's no P/E ratios to consider because the only thing Crypto "produces" is Crypto transactions. It's also impossible to even guess at a floor or ceiling for the price of a cryptocurrency. The only thing that determines their price is human sentiment - a very fickle input. Interestingly, this isn't really true anymore. Mo…

> ownership in some protocol But what is the value of the protocol? > actually returning profits Are there actually profits if the protocol is worthless?

>But what is the value of the protocol?

Wish I knew! Investing would be a lot easier.

> Are there actually profits if the protocol is worthless?

Nope, therefore these protocols are not worthless?

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#158

Post by Lordarminius »

nrzd wrote: post #52

I’m blown away by how anti-crypto this discussion is. I hadn’t realized how negative the prevailing sentiment is on Hacker News. One argument seems to be that cryptocurrency is purely speculative, which is apparently a dirty word. What about the stock market? What about any kind of investment? If you truly believe that cryptocurrency is the basis for a superior economic system, isn’t it rational and wise to put some…

Most HN readers work for Web2 companies and are invested in the past. Nothing to see here

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#159

Post by concinds »

lolinder wrote: post #120
concinds wrote: post #77

Earlier quoted context omitted.

Most of the anti-crypto critiques in Silicon Valley bring up these exact arguments: it's speculative, and it enables scams. At its root, it's a hatred of the "get rich quick" aspects of crypto. It evokes the same contempt that old-wealth (people with butlers) have for new-wealth (people with Lamborghinis): that they're childish, didn't earn their privileges, and need to be reined in. It's class signalling. Thankfully…

> At its root, it's a hatred of the "get rich quick" aspects of crypto. It evokes the same contempt that old-wealth (people with butlers) have for new-wealth (people with Lamborghinis): that they're childish, didn't earn their privileges, and need to be reined in. It's class signalling. My hatred of get-rich-quick schemes has nothing to do with class signaling. I hate such schemes because they're almost universally s…

I agree that get rich quick schemes are sad, but on the other hand, when I turn off my adblock, 99% of ads I get on YouTube are for copytrading with traditional stocks on eToro. Financially illiterate people get given a rope to hang themselves with crypto, but it doesn't take away from the benefits of crypto, which I think has a (small) place in any portfolio, and could potentially be a lifesaver in any cashless+NIRP society. I wouldn't try to pilot a plane without training, and wouldn't buy any crypto without knowing deeply about it. I don't see it as a red flag of the technology that people do stupid things, just a sign of human laziness (surely, getting the proper knowledge before piloting a plane, trading stocks, or buying crypto is common sense).

There are many people who want governments to "step in" and protect people from themselves, but governments will likely have ulterior motives (KYC, AML, financial control) when they do so.

Re: U.S. Secret Service Launches Cryptocurrency Awareness Hub

#160

Post by Consultant32452 »

jeremyjh wrote: post #27
Consultant32452 wrote: post #22

Earlier quoted context omitted.

Deflationary currency encourages savings, inflationary currency encourages spending. We're just so accustomed to a world where our money is steadily becoming worthless that sometimes we forget there are other options.

Deflation has nothing to do with it, its purely driven by speculation.

Speculation is just an emotional word used to throw you off the scent. You are also speculating about the future value of the dollar.
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